What The Dallas Tornadoes Mean For Insurance Premiums
April 4, 2012 9:04:00 pm
Several large tornadoes tore up home and businesses all over the Metroplex, and now insurance adjusters are working overtime to process claims. Sandra Helin is with Southwestern Insurance Information Service and says insurance companies are required to have enough money on hand to cover losses.
"They're required by the Texas Department of Insurance actually to be financially solvent to pay these claims so they don't have to raise rates after any event. As a matter of fact, it's illegal to raise rates based on past losses."
She says theoretically, consumers in other parts of the state shouldn't see trickle-down rate increases because of the Dallas-Fort Worth storms, but companies can raise rates based on what they predict for the future. Helin says insurance companies also have what's called "re-insurance" to protect against huge losses.
"Re-insurance kicks in at different levels for every different company. It depends on what they purchase and the agreement that they enter into with a re-insurance company. I believe that most of the insurers have the money in cash and in reserves to cover the losses and pay the claims."
Officials reported more than 20 injuries, but no deaths after those tornadoes.