Homeowners in Rhode Island are paying much more for insurance than they had been used to – in some cases triple the previous rate.
Consumer advocates claim that insurers are gouging the public by using pessimistic weather modeling to justify much-higher charges. Given the record profits that insurers have been enjoying over the last several years, it is not surprising that they serve as a convenient whipping boy.
But it wasn’t long ago that they were taking record losses. And as the director of the R.I. Department of Business Regulation, A. Michael Marques, notes, those profits could turn to losses again if a hurricane were to hit Rhode Island.
The truth is, homeowner’s insurance rates had been unrealistically low, so the adjustment will come as a most unwelcome shock. Whether the insurance companies are now overcharging is a matter for the DBR to investigate.
Wherever the rates eventually settle, it is a safe bet they will be significantly higher than they have been. And given the increasing risks of living near the ocean, that may be painful, but it is also reasonable.