Are homeowners looking down the barrel at yet another home insurance rate increase?

It's looking that way, according to this article featured today by the Insurance Journal. A recent analysis by reinsurance firm Aon Re, shows that previous rate hikes have not yielded an adequate return on equity (ROE) for home insurance—meaning rates will need to go up.

Aon Re pegs this year's ROE for home insurance to land around 5.7 percent; the 2005 ROE for home insurance was 9.3 percent...quite a deviation from the 14 percent ROE most insurers aim for.

President and CEO of Aon Re, Bryan G. Ehrhart, admitted that insurers are stuck between a rock and a hard place but defended rate hikes as a way to offset meteorologist predictions for stronger hurricane seasons going forward. He also pointed out that home insurers need to have more capital on hand to "meet industry standards" than was necessary in previous years.

Not surprisingly, hurricane-prone states stand bear the brunt of rate increases:

Aon Re's prospective return on equity is 3.5 percent for hurricane- affected states viewed as a group, 8.1 percent for the non-hurricane-affected states. To reach a prospective return on equity of 14 percent, an estimated average rate increase of 43.3 percent would be required for the hurricane-affected states, 11.1 percent for the non-hurricane-affected states.

Discouraging news for homeowners and their subsequent insurers who have to break the news when premiums increase. But what can you do? Increased risk = higher premiums. It's textbook.

So what do you say to commenters like "Bulldogg" who want to know, "Where are all the hurricanes?"

Take a look at the story courtesy of IJ here, and make sure to check out the reader comments. Feel free to post your own thoughts on the matter right here on the Agent Blog.