Wisconsin business owners, homeowners and drivers can expect to see either modest increases or reductions in their property and casualty insurance premiums in 2007. P&C insurance in Wisconsin and its surrounding states, including Minnesota, Illinois, Michigan, Indiana and Iowa, had premium decreases of 1 percent in the past nine months and a decrease of 0.2 percent in 2005, said Genio Staranczak, chief economist for the Property Casualty Insurers Association of America, based in Des Plaines, Ill.
Staranczak expects to see that pattern continue in 2007, mainly because the Midwest has so few natural disasters.
The main driver of business and homeowners insurance premiums is the frequency of catastrophes and the frequency of accidents for automobile drivers, Staranczak said.
Business owners can expect a decrease by at least 5 percent in 2007 across their entire insurance programs, according to Robert Hartwig, executive vice president and chief economist for the Insurance Information Institute in New York.
“Drivers, homeowners and businesses in most parts of the United States will be left with more cash in their pockets as insurance costs fall in absolute terms, or at least relative to income growth and growth in GDP,” Hartwig said. “The bottom line is that falling insurance prices are lowering the cost of doing business, driving a car or owning a home for most Americans.”
Another factor for decreased prices was that insurance companies nationwide had a profitable year in 2006, said Dave Prendergast, assistant field vice president for the Midwest region at The Allstate Corp., based in Northbrook, Ill.
“2006 was a good year, but primarily because there were no hurricanes, when in 2005, there were nine hurricanes, including one that hit twice,” Prendergast said.
Insurance experts expect auto insurance expenditures to fall 0.5 percent in 2007. Wisconsin also will see a benefit in 2007 because of a decrease in the frequency of car accidents in the state, Staranczak said.
Last May, Allstate released the results of its 2006 America’s Best Driver’s report, in which Milwaukee ranked No. 1 and Madison ranked No. 8 for safe-driving communities among the nation’s mid-sized cities with populations between 500,000 and 1 million. According to the report, the relative likelihood of getting into a car accident in Milwaukee is 20-percent below the national average.
“Overall, the share of P&C insurance premiums, relative to the overall economy, (shrunk) by about 3.5 percent in 2006 and 3.1 percent in 2007,” Hartwig said.
At the same time, property insurance prices in hurricane-prone coastal communities will continue to rise, property and casualty insurance experts say.
