Insurance rates were trending down before Katrina, and risk managers who were lucky enough to lock in prices before the hurricane system got good coverage at lower prices. Those who did not renew before Katrina are getting hit with price increases as high as 20% for property insurance. The study examined employers with insurance renewals before and after the storm hit.

Rates were down for all property and casualty lines. According to Insurance Journal;

"…renewal premiums down on average over five percent against the same quarter last year. Directors and officers liability experienced the steepest decline, falling 8.45 percent. Property premiums fell just under six percent and general liability was down 5.2 percent. Workers Compensation was the only major line that was down less than five percent; that line was down 3.75 percent."

That was before the storm, when record profits encouraged insurers to seek more premiums, leading them to make price and coverage concessions. Industry insiders are not sure whether the storms' impact is short- or long-lived. My bet is the latter. Insurance underwriting is a mix of art, science, and emotion, and the non-stop news of fresh new tropical depressions, with eye-catching graphics, breaking news interruptions, and screaming headlines will make a long term impression on underwriters.

Remember, they don't get fired for charging more or not writing business, they get canned for underpricing deals or doing deals that they shouldn't.

What does this mean for you?

P&C insurance rates are heading up and will stay up for a while. Health care cost inflation will exacerbate the problem.