Homeowners and automobile insurance rates are on the rise due to factors like increased natural disasters, rising claim costs, and advanced vehicle technologies. Insurers are adjusting premiums to cope with evolving risks and maintain profitability, impacting policyholders with higher costs for both home and auto coverage.
Rising Costs of Labor & Materials
The cost of building materials and labor has increased significantly in the past 3 years and the industry has been slow to adjust, which results in insurance companies paying more for claim repairs then expected.
20 – 50% Increase Of Reinsurance Rates in 2023
Insurance companies purchase insurance called reinsurance to reduce their risk. Reinsurance
rates increased 20-50% in 2023 which results in companies having to pay more for their insurance which is passed onto policy holders.
What Effects Your Ability to Move Insurance Companies
- Claims severity and frequency
- Age of home and roof
- Year, Make & Model of vehicle example: most carriers are not accepting Hyundai’s & Kia’s due to high theft rates
- Nonrenewal from other carriers
- Frequency of moving insurance carriers
- Tickets/moving violations including speeding, mobile phone usage, DWI
Record Amount of Billion Dollar Claim Events in 2023
“The frequency of Billion Dollar Disasters from flood, wildfire, drought, severe storm, tropical cyclones, and winter storms has increased dramatically, growing from 3 per year in 1980 to 25 a year in 2023.” (First Street Foundation, 2023)
Company Restrictions to Lower Risk
Insurance companies are limiting risks, such as older roofs, in attempts to lower the risk they are taking on. These guidelines and restrictions make issuing new policies more difficult and it has reduced competition.
What Can You Do to Lower Your Premiums?
- Let us know if you’ve replaced your roof
- Install home products that will lower your chance of a claim (water shut off values, home security systems)
- Participate in auto telematics for a discount on your auto policy
- Increase auto & home deductibles
- Defensive Driving courses for drivers over 50 years old
What Does Insurance Look Like Over the Next Year?
The trajectory of insurance rates in the future is uncertain and depends on various factors. While advancements in technology and data analytics may lead to more accurate risk assessments, potentially reducing rates for some individuals, other factors such as increased frequency of natural disasters and rising claim costs could drive rates higher. Insurers will continue to adapt to evolving risks and market dynamics. The future of insurance rates is likely to be influenced by a combination of technological advancements, regulatory changes, and the overall economic environment.