First American Property & Casualty Insurance Company submitted a request to the Oregon Bureau of Insurance in August 2017 to increase the premiums for its homeowners insurance customers in the state by an average of 16.8%.
The company stated in its rate filing that the reason for these changes is a loss of profit. According to the filing, First American has a five-year loss ratio of 74.8%, which means the company paid out $74.80 in claims for every $100 in paid in premiums. As a direct result of that ratio, the company says, it has been forced to increase premiums.
The filing is still pending but, if approved, the proposed changes would be effective for policies written for new and current policyholders in Oregon on or after October 30, 2017.
First American Property & Casualty Insurance Company proposed rate impact
If the changes are approved, premiums are estimated to increase for 3,602 policyholders in Oregon by an average of $84 per policy. As with most increases, though, the impact will be spread unevenly, with some policyholders receiving increases lower than that figure and other receiving larger hikes. In percentage terms, the company reports the proposed rate change will range from 0%--in other words, no change--to as much as a 30% increase.
As of 2016, the company ranked 56th among home insurance carriers who are active in the state. The Oregon homeowners insurance market is highly concentrated, with State Farm Fire & Casualty Company taking the bulk of business in the state, with 24.2% of all policies. First American Property & Casualty commands a miniscule 0.2% of the state’s homeowners market share.
Comparing rate changes
Assuming these hikes are approved, they would be among the highest rate increases to go into effect for homeowners insurance in Oregon in 2017. As of August, a total of 11 companies have been approved for rate changes by regulators in the state. The average increase in premiums arising from those decisions is 2.3%. Within the approved list, the largest hikes were for Country Insurance & Financial Services Group (with an average increase of 11.3%); Hartford Fire & Casualty Group (6.7% on average); and Liberty Mutual Group (6.5% on average).
When compared to the rest of the U.S., homeowners in Oregon enjoy some of the cheapest home insurance. Premiums are 47% cheaper than the average premiums for homeowners in the country as a whole, with Oregonian policyholders facing an average annual fee of $574 to insure their homes. That annual tab translates into an average monthly cost of $48.
Oregon’s downstairs neighbor, California, is on the more expensive end of the spectrum. Paying an average of $81 per month, where residents of the Golden State have to spend more. However, in Idaho, just to the side of Oregon, homeowners enjoy the 2nd cheapest premiums in the nation, at only $49 per month on average.
Other policy changes
First American Property & Casualty also used the request to add new guidelines to their earthquake coverage. In order to qualify for earthquake coverage, policyholders’ homes now must have been built after 1950. If a policyholder's home was built after 1985, the home must be retrofitted in order to meet the requirements. Homeowners must submit proof of retrofitting. The proof can range from pictures of foundation bolts, structural engineer inspection report, or invoices from contractors.