Insurance still a bargain, even with higher rates

To the editor:

In response to a recent Speak Out caller referring to the rate increase in his homeowner's insurance and that it was still a good deal: You are in a minority who think so objectively about insurance and how rates are determined.

Whenever your insurance company pays out more in claims than it receives in premiums, two things have to happen. Underwriting rules have to be tightened to take on only the very best risks. And rates have to be adjusted in order to maintain the ability to pay claims.

2001 was an unusually troublesome year for property and casualty insurance companies. Construction costs continue to skyrocket. The stock market's atmosphere affected every company's investment returns. And a large number of catastrophic storms all led to large underwriting losses. All of those factors led to increased rates and, in some cases, reduced availability to consumers.

I can assure you that we do not like to see premium increases any more than anyone else. After all, we pay the same rates you pay, so it affects us as well. But to maintain our ability to take care of you when you need us the most, sometimes it means premium increases. Even with those increases, an overwhelming portion of the risk lies with us as an insurance company, not the consumer. It's still a outstanding value. But sometimes it takes a sizable claim for policyholders to realize what a good value it is.

DALE GILLILAND

State Farm Insurance Agent

Cape Girardeau