The insurance biz hikes rates after big losses. Then over the years lowers rates. Sounds crazy but its true.
not crazy but true. it's how they get their money
back. here's my experience.
i live in a townhouse community. the hoa insures the exterior of all homes and common areas. in 2004 we paid $50k for coverage, an amount we had been paying for several years. then we had three hurricanes go through. we put in a claim for $300k, and they paid.
the next year, 2005, our insurance policy doubled to $100k. the next year, 2006, it went to $150k, and the next year, 2007, it went to $200k. it stayed at $200k in 2008, then went down to $150k in 2009. in 2010 it went down to $100k, where it has remained.
so if you think we could have been paying $50k a year if there had never been a hurricane, it appears that for paying our $300k claim in 2004 the insurance company had already recouped it's payout by 2007. since then they've taken in an extra $400k.
the way i see it, our insurance company doesn't need to invest in the stock market. they make far better returns investing in the 'insurance' market...