Do terrorist attacks give insurers the excuse to hike prices?

As a matter of fact, they do. Insurers were unfairly increasing their premiums during the September 11 attack, and will continue to do so after ever terrorist attack, claim the Consumer Federation of America (CFA).

Any proposals that weaken regulator’s oversight of insurance rates of and coverage are urged by the nation’s commissioners to be rejected by the CFA.

Robert Hunter, CFA’s director and former Texas Insurance Commissioner, claims, “IT would be politically embarrassing for Congress to put the taxpayer on the hook for the losses from terrorism while insurers hike prices beyond reason.”

The following “growing evidence” proves the price gouging (Hunter’s citations)

• Premiums for airlines by 200 to 400 percent were raised by aviation underwriters.

• Insuring Giants Stadium now costs $3.5 million.

• There is a 20 to 50 percent increase of premiums for most insurers because they are eliminating terrorism coverage from their policies.

Joe Annotti, the assistant vice president of public affairs for the National Association of Independent Insurers (NAII) says that the average consumer doesn’t have much to get worked up about.

Annoti claims, “Companies that insure personal lines – auto and homes – have been affected very little. Most consumers’ exposure to terrorism hasn’t tremendously increased. I suppose if you have an apartment next to the Sears Tower, your policy premiums have increased, but that’s in relatively few situations.”

Insurance claims from the terrorist attacks have little impact on the cost of auto and home insurance moving forward, according to the Insurance Information Institute (III). However, a significant increase in property and liability business is expected.

Unfortunately, terrorist attacks do give insurers the right to raise premiums without any consideration and probably without a good enough reason. However, premiums will rise. The rise of premiums is highly unpredictable.

If you think that your insurance company is raising premiums too high and in a far too short period of time, you can always shop around for a better deal. There are plenty of insurance companies out there that will offer good coverage, so this really shouldn’t be a problem. Search on the internet, find discounts, and try to purchase policies online in order to better find a deal.