07/28/2023
PSA: I don't usually post insurance stuff on my personal page, 😑 but I do when I feel it’s relevant for the masses, I feel right now is that time. Bits and pieces of this post are pulled from various industry pages, news articles and peer posts. I hope that you find the below information useful and I hope that it helps explain what is happening in the insurance world today. It won’t matter what insurance company/carrier you are with, this is an industry issue.
The Insurance marketplace is tightening up and it's happening at a rapid pace. The changes you are/will see is occurring amongst the auto and home market, but the commercial hab market (think condo associations & apartment building owners) is also being hit. There are many carriers opting to pull a hard stop on issuing any new policies across the country. Carriers are leaving the market, and/or you will see that they are selling to other carriers/merging. They simply can't operate profitably in this inflationary market. It's getting downright ugly out there. This market is disrupted, and it WILL affect you in some way shape or form.
The cost of claims has risen exponentially in the past 2 years. Thus, resulting in the carriers having to raise premiums and pull out of some markets. If you have an auto or home insurance policy, your rates have gone up. This isn't personal, it’s not based on a claim you may or may have not had, it’s simply the cost of doing business.
➡️ The cost to rebuild your home has increased dramatically due to the rising cost of materials and labor. Supply chain for materials continues to be an issue. We can all agree that everything has gone up in price. Carriers simply can’t survive paying these higher prices without charging more themselves.
➡️ The cost to repair your car is up significantly due to the rising cost of auto parts and labor to fix your car. In addition, parts in vehicles now include some technology feature. Replacing a side mirror used to be $500 - now it’s more than triple that.
➡️ The cost of medical care continues to skyrocket. Most people are not aware, but majority of your auto premiums are based on medical, if medical costs continue to rise, so will your insurance costs. Bodily injury on auto accidents is off the charts.
➡️ Litigation is expensive, and settlements are rising at an unprecedented rate.
➡️ Post COVID, both the frequency and severity of auto accidents have increased at a pace nobody was prepared for, along with the rising frequency of auto fatalities.
➡️ Reinsurance (the insurance your insurance carrier buys to help cushion catastrophic loss) is at or approaching capacity in many markets, and rising rates are unsustainable. Because of this, insurance companies are forced to raise rates.
The above-mentioned items along with a combination of a multitude of other reasons is a significant issue and it is affecting the property & casualty industry (home and auto), and pricing correction is anticipated at least through 2024. This is a nice way to say - you will see rate increases more frequently. It sucks, I know.
There are some things you can do to help get through this current insurance market:
✅️ Consider Higher Deductibles: This will help save some money on your policy.
✅️ Safe Driving Telematic Programs: Telematics can reward you by giving you a discount for good driving.
✅️ Discount Reviews: Make sure you're getting everything you're entitled to. Every carrier has different discount opportunities. Make sure you go over those with your agent.
✅️ Bundle your Auto and Home for more discounts and more stable pricing. Bundled/Packaged policies most always include better coverage and benefits and the cost savings is usually 20% on each policy.
✅️ Consider Tenure: Jumping companies too often will hurt you in the long run. In addition, some carriers won’t take you as a new client if you have less than two years with a carrier. And more importantly, carriers are getting off of some risks if a claim happens in the new business term or for the number of claims in a 3-5 year window. Tenure matters with a carrier.
✅️ Follow the laws so you don’t get any tickets. Those tickets really add rate to your policy and stay on your record 3-5 years, depending on the carrier.
✅️ Absorb small claims when you're able. Talk with your agent and let them claims counsel you should a loss happen. Stop using your towing or road side assistance as a maintenance policy. Frequency of claims matters it REALLY does matter.
✅ Pay your insurance bill on time, many carriers will increase your rate every time you cancel/lapse due to non-payment.
✅️ Buy your insurance from an experienced agent that can help you navigate this crazy market without sacrificing coverage. Lowering coverages could ultimately cost you more money in a loss. ND State minimum for property damage of $25k won’t cover majority of the cars on the roads these days. Once your limits run out, you are responsible for anything above that.
Last, please remember that your agent and their teams are agents for the carriers. We do not make the rules and we do not control the rates. We are here to help educate, make sure you have the best insurance for your situation at the best rate available, manage your account, and claims counsel when needed.
As always, happy to help and I hope this message explains a little bit of what is going on in the insurance market place. And, please be nice to your insurance agent - she or he are taking the same increases, navigating carrier changes and doing their best to help you through this. ❤️
With the help, news articles, the insurance industry & Jill Dawson.
