Are You Paying Too Much for Insurance?

Here’s Why.

Many individuals and businesses have recently experienced escalating insurance rates across all types of policies, including home, auto, business and health insurance. In an effort to update our customers and be completely transparent, we want to take a moment to share some of the underlying reasons for the dramatic increase in rates.

Increase in Claims Frequency & Severity

One of the primary reasons for rising insurance rates is the increase in the frequency and severity of claims. With the frequency of natural disasters, there has been a significant increase in catastrophic events resulting in increased claims payouts. Additionally, distracted driving and other risky behaviors on the road have led to an increase in accidents and insurance claims.

Cost of Repairs

The cost to repair, reroof or rebuild your home is up significantly, as is the cost to replace your car or repair it. This is also affecting businesses with their commercial property insurance.

Inflation & Carriers’ Response

Another driver of rising insurance rates is inflation, which affects the cost of goods and services across the economy. With inflation, the costs associated with replacing damaged property or medical procedures increase, leading to higher claims payouts and, consequently, higher insurance premiums. Major insurance carriers are pulling out of insuring certain geographical areas altogether in some types of insurance; they are struggling with profitability with today’s inflation level.

Litigation Costs

As with the above services, legal fees have increased, and lawsuits and settlements are at a record high.

Cost of Reinsurance

Reinsurance companies, which insure insurance companies, have increased their rates significantly in recent years, as the risks of catastrophic claims and other large-scale events have risen. Since insurance companies rely on reinsurance to protect their bottom line, they pass on some of the additional reinsurance costs to policyholders.

Change in Demographics

Insurance rates are also affected by shifts in demographics, such as the aging of the population. This demographic change has led to a rise in health care costs, as older individuals tend to require more medical care. Additionally, the increasing number of drivers on the road has led to more accidents and claims.

How Can Consumers Respond?

While many factors have contributed to the recent surge in insurance rates, it is clear that the primary driver is the increased frequency and severity of claims.

It is critical to note that many of these factors are out of the control of policyholders, and the best course of action is to stay informed about changes in the insurance market and seek expert advice.

Some Things That Can Save You Money Include:

  • Try an independent insurance agency. They will take the time to price your insurance options for all areas of needed coverage.
  • Through that process, they may find and recommend that bundling some of your insurance with the same carrier is the most economical way to go
  • Raising your deductible is an option to get rates down, but you must consider that something may happen and be confident you can handle the extra cost if it should.
  • Be a safe driver – don’t speed, don’t run stoplights, don’t text and drive – you know the drill! Tickets and accidents raise your rates for a long period of time.
  • Be a conscientious homeowner: Practice best safety practices around the house from regularly checking fire and carbon monoxide alarms to preventing trip hazards. Keep branches trimmed and away from potentially damaging your home

Do you need a hand figuring it all out? We are here to help.