The talk of the town at local mailboxes is about the significant increase in insurance premiums. Have you noticed this rise as well? Let’s explore the causes and discuss proactive measures we can take.
The current economic situation, including inflation and the escalating costs of many goods, can be traced back to the global pandemic. Changes in shopping habits due to supply chain issues and adjustments in driving habits as more people work from home have contributed to these changes. When the prices of goods and services rise, the cost of replacing and repairing cars and homes will naturally be affected, impacting consumers like us.
The insurance marketplace is undergoing rapid and urgent changes, particularly for home and auto insurance companies. In this inflationary environment, companies are facing significant operating challenges, leading to swift decisions such as halting the issuance of new policies or exiting the market. Daily announcements of pauses in new business or complete stops on writing new policies are becoming increasingly common.
One unique change is requesting full premium payment upfront for new business or imposing a 20-30 day hold on new applications. Underwriting guidelines have become stricter, with some companies only considering preferred customers with no claims within five years, home and auto bundles, and more.
The public is feeling the impact of these rising premiums, which have doubled or tripled compared to previous years. The cost of claims has risen significantly in the past two years, leading carriers to raise premiums or pull out of specific markets. Repair costs for vehicles and medical care continue to soar, driving up bodily injury costs in auto accidents. Reinsurance capacity is reaching its limits in many markets, causing unsustainable rate increases.
What can you, the consumer, do to combat these rising costs? Think about taking proactive measures that may help to alleviate some of the pain.
- Consider opting for higher deductibles to navigate the insurance market.
- Participate in safe driving telematic programs for potential discounts.
- Regularly review available discount opportunities with your insurance agent.
- Avoid letting policies cancel or lapse, as reinstating coverage can be challenging.
- Bundling auto and home insurance can lead to discounts and more stable pricing.
- Keep a long-term commitment to an insurance carrier.
- Adhere to traffic laws to avoid tickets.
- Manage small claims personally.
- Reserve coverage for catastrophic losses.
- Refrain from using towing or roadside assistance excessively, as claim frequency significantly impacts insurance rates.
Insurance can be perplexing and intricate, but remember, you’re not alone in this. Meet with your local insurance broker or independent agent to review your insurance needs. They are there to guide you through these changes and help you make the best decisions for your situation.
—Wanda Carlson
