The Insurance marketplace is tightening up and it’s happening fast. It’s happening especially fast for auto and home insurance companies. Carriers are pulling a full hard stop on issuing any new policies across the country. Carriers are leaving the market or 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.
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 not have had; it’s simply the cost of doing business.
➡️ The cost to rebuild your home is up dramatically due to the rising cost of materials and labor. The 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 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. Replacing a side mirror used to be $500 – now it’s more than triple that.
➡️ The cost of medical care continues to skyrocket. Bodily injury in 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 WAY up post-COVID, 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.
This is a significant issue 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.
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 for 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 roadside assistance as a maintenance policy. The frequency of claims matters. It REALLY matters.
✅️ Buy your insurance from an experienced Independent Insurance Broker that has options and can help you navigate this crazy market WITHOUT SACRIFICING COVERAGE. Lowering coverages could ultimately cost you more money in a loss. Utah State minimum of 15k won’t cover 95% of the cars on the roads these days. Once your limits run out, you are responsible for anything above that.
Please remember that we are agents for the carriers; we don’t work directly for them. We don’t make the rules, we don’t have control over the rates and we don’t make the decision if your policy is canceled by the carriers. We are here to help educate, make sure you have the best insurance for your situation at the best rate available, manage your account with the carrier, and claims counsel when needed.
As always, happy to help, and I hope this message explains a little bit about what is going on in the insurance marketplace. And please be nice to your insurance agent – she or he is taking the same increases, navigating carrier changes, and doing their best to help you through this. ❤️
(contributed by several insurance agents in the industry)
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