How will Hurricane Katrina affect the price of insurance?
The answer depends on where you live. People who live in states that do not have a risk of hurricane or tropical storm will not be affected. In areas vulnerable to such risks, rates have been rising in recent years and they will continue to do so. Thats because the frequency and severity of catastrophic storms is expected to grow for decades to come. Insurers cannot increase rates to make up for past losses. They must be based on projections of future losses in a given state. Insurers cannot arbitrarily raise rates. Rates must be reviewed and approved by state insurance departments. Companies must demonstrate that there is an increased risk in a specific state. Losses from one state cannot be used to raise rates in another. Prices will increase nationwide, however, if lawsuits succeed in retroactively rewriting insurance contracts to compel property insurance companies to pay the flood damage claims of people who did not buy flood insurance coverage from the National Flood Insurance Pr
