(NewsNation) — Insurances companies across the U.S. are increasing prices, particularly in high-risk areas.
In states like California and Florida, record-setting natural disasters and inflation are squeezing insurance companies, and they’re passing the prices to consumers, making it more challenging to receive coverage.
Insurance companies nationwide have said whether it’s a tornado, hurricane or fire, they know how much stress is on homeowners. More studies are showing that not only are these major weather events happening more but are also more severe, and for that reason, so many people are living in harm’s way.
“Not only do you have an increased frequency and severity of disasters, but you also have to look at it from the insurers’ perspective,” said Michael Barry, chief communications officer at the Insurance Information Institute. “They’re operating in, like the rest of the economy, a high inflation environment.”
As a result, in California, State Farm will no longer accept applications for home and business insurance due to wildfire risks and the cost of rebuilding. The insurance agency cited construction costs are outpacing inflation and the challenging reinsurance market.
“With wildfires, floods, hurricanes, lava, all of those things have created much more risk for the insurance companies, and they are not a nonprofit business,” said Ted Jenkin, CEO of Oxygen Financial.
Meanwhile, Florida has suffered from storms and difficulties for years, dating back to Hurricane Andrew in 1992.
Major insurance companies scaled back operations and stopped offering property insurance to Florida residents after the 2004 and 2005 hurricanes, Forbes Advisor reported. As a result, homeowners were left with fewer options.