08/14/2023
To all my friends, family, customers and really to everyone out here who has home and auto insurance. I hope you find this information useful. It doesn’t matter what carrier you are with, this is an industry wide issue, regardless of what state you live in.
Also, please keep in mind that we are agents for the carriers. We don’t make the rules, we don’t have control over the rates, and we did not make these decisions. We and our team share the same experiences as everyone else, we live this too! We are here to help educate you and make sure you have the best insurance for your situation.
..
So what’s going on in the insurance world lately and what is coming…..
Some carriers are putting a full stop on issuing any new policies across the country, and there are some carriers who are just leaving the market all together. They simply can't operate profitably in this inflationary market.
The market is very disrupted! The cost of claims has risen exponentially in the past 2 years, thus resulting in carriers having to raise premiums or just pull out of some markets. In some states, carriers have applied for rate increases, but have not been able to get them approved by the state, so they have simply stopped writing new business.
Every day we hear about a pause on new business, or a carrier putting a stop on writing new policies. Some carriers are requiring customers to pay in full for all new business or requiring a 7 to 30 day hold on new applications. Some carriers may be starting a shift in underwriting guidelines, so they will only write “preferred business” (no claims within 5 years, must bundle auto with homeowners, etc.). Some carriers will not reinstate coverage if it lapses even for 1 day, no matter the reason.
..
If you have an auto or home insurance policy, your rates have gone up! If they haven’t yet, they will. This IS NOT personal, it’s not based on a claim you may or may not have had, it’s simply the cost of doing business in 2023. If you have not received a rate increase, be prepared for one at your next renewal regardless of which carrier you are with.
• The cost to rebuild your home is up 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 increasing premium.
• The cost to repair your car is up dramatically due to the rising cost of auto parts and labor to fix your car. In addition, parts in vehicles now include some technology features that make it more expensive to replace.
• The cost of medical care continues to skyrocket. Bodily injury on auto accidents is off the charts.
• Litigation is expensive and settlements are rising at an unprecedented rate.
• Both the frequency and severity of auto accidents are up post COVID along with the rising frequency of auto fatalities.
This is a significant issue affecting the insurance industry, and every company is anticipating increase in rates at least through 2024. It won’t be for forever, but it is here now.
..
There are some things you can do to help get through this current insurance market. First and foremost, call your agent and go over all options to lower your rates while still maintaining quality coverages. For example;
• Consider higher deductibles.
• Michigan residents, take a good look into your PIP options!
• Safe Driving Telematic Programs (the device you put in your car to grade your driving). Telematics can reward you by giving you a discount for good driving.
• Discounts - 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.
• Try your best to not let your policy lapse. Carriers are not reinstating coverage as easily as they once did. And some carriers wont write you as a new customer if you don’t have current active insurance.
• BUNDLE – as always, the more you bundle, the more you can save!
• Tenure - jumping companies too often will hurt you in the long run. Now some carriers won’t take you as a new client if you have less than two years with your current carrier. And more importantly, carriers are letting go of customers if a claim happens in the new business term (3–5-year window). Tenure matters with a carrier.
• Follow the laws so you don’t get any tickets. Michigan drivers, that new law that passed about using your phone, even at a red light or stop sign. Those tickets really add rate to your policy and stay on your record up to 5 years, depending on the carrier.
• Avoid making small claims when you're able and save coverage for catastrophic losses. Talk with your agent and let them counsel you should a claim happen.
Thank you to some very smart agents that helped put this PSA together. Sharing this information can be helpful to everyone!
