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Category: Inflation

The Hardening of the Personal Insurance Market

Posted on by Marc Zettl
Umbrella Insurance word cloud collage, business concept background

How the Economy Affects Insurance Rates

Rising costs are a concern for both insurance companies and consumers. Inflation, higher interest rates, increased costs, and weather and climate events all affect the cost of insurance coverage.

Here’s a look at some of the factors that may be influencing what you pay.

Auto

  1. Supply chain shortages have made it difficult to repair vehicles efficiently and at a low cost. (1)
  2. Nearly 80% of collision repair shops are scheduling appointments 2 weeks or more into the future. (2)
  3. Driven by rising prices, the amount insurers paid to cover claims increased by $30 billion in 2021. (3)

Costs have increased:

  • 19.5% for motor vehicle repairs (4)
  • 9.9% for motor vehicle parts and equipment (4)

Home

Prices for materials continue to rise:

  • 12.5% Floor coverings (4)
  • 18% Drywall (5)
  • 14.8% Concrete products (4)

There are more frequent and severe weather and climate events, including wildfires and hurricanes. (6) The annual cost of natural catastrophes around the world is estimated at $123 billion. (7) There has also been a surge in nonweather-related water damage, such as plumbing leaks.

Each year:

  • There’s approximately $8.24 billion in these types of property losses. (8)
  • 1 in 60 insured homes has a claim caused by water damage or freezing. (9)

As we all navigate a changing economy, there are plenty of ways to save. Talk with your agent today to review your products and discounts.

References

[1] “Repair Costs & Labor Issues Affecting Insurers in 2023,” agencyheight.com/car-repair-costs (Jan. 9, 2023).

[2] “Crash Course 2022 Mid-Year Update: Gearing Up for What’s Ahead,” cccis.com/news-and-insights/insights/crash-course-2022-mid-year-updategearing-up-for-whats-ahead/ (May 31, 2022).

[3] “Countering inflation: How US P&C insurers can build resilience,” mckinsey.com/industries/financial-services/our-insights/countering-inflation-how-us-pand-

c-insurers-can-build-resilience (Aug. 25, 2022).

[4] Bureau of Labor Statistics/Nationwide Economics (December 2022).

[5] “CoreLogic Quarterly Construction Insights Q4 2022,” corelogic.com/wp-content/uploads/sites/4/2022/12/QCI-Q4-22.pdf (accessed Jan. 26, 2023).

[6] “Global warming frequently asked questions,” climate.gov/news-features/understanding-climate/global-warming-frequently-asked-questions (Oct. 29, 2020).

[7] “Global Average Annual Insured Losses from Extreme Events in Excess of $120 Billion, New Report from Verisk Finds,” verisk.com/newsroom/globalaverage-annual-insured-losses-from-extreme-events-in-excess-of-$120-billion-new-report-finds/ (Sept. 28, 2022).

[8] “WaterRisk: The first and only predictor of non-weather water claims,” locationinc.com/water-risk-data (accessed Jan. 26, 2023).

[9] “Facts + Statistics: Homeowners and renters insurance,” iii.org/fact-statistic/facts-statistics-homeowners-and-renters-insurance (accessed Feb. 10, 2023).

What is inflation and how does it affect the insurance industry and your premiums?

Posted on by Marc Zettl

Inflation is a term that is thrown around a lot in the news, but what does it actually mean? In short, inflation is when prices for goods and services increase. In the world of insurance, this can have a big impact on premiums. In this blog post, we will discuss how inflation affects premiums and why it’s important to keep track of changes in the rate of inflation.

There are a few different ways to measure inflation, but the most common is the Consumer Price Index (CPI). The CPI measures changes in the prices of a basket of goods and services that are commonly consumed by households. In the United States, the CPI is released on a monthly basis by the Bureau of Labor Statistics.

When the CPI goes up, it means that prices are rising and the purchasing power of your dollar is decreasing. In other words, it takes more money to buy the same amount of goods or services. Inflation can have a major impact on your insurance premiums because insurance companies use something called the “cost of living adjustment” (COLA) to account for changes in the CPI.

The COLA is a percentage increase or decrease that is applied to your insurance premiums to keep them in line with the rising cost of living. For example, if the CPI goes up by two percent, your insurance company may raise your premiums by two percent as well. Inflation can also affect the insurance industry in other ways. Another example would be, that if the cost of medical care goes up, it would be likely that you would see an increase in your health insurance premiums. In addition, inflation can erode the value of investments that insurance companies hold, which can impact their financial stability and ability to pay claims.

While there are a number of factors that can affect your insurance premiums, inflation is one of the most important to keep in mind. While this may seem like a disadvantage for consumers, it’s important to remember that insurance is designed to protect you from financial loss in the event of an unforeseen circumstance. In other words, while your premiums may go up in response to inflation, so will the payouts you receive if you need to make a claim. In the end, this ensures that insurance remains an effective way to protect yourself and your family from financial hardship.

If you have any questions about how inflation affects your insurance premiums, or if you would like to learn more about how insurance works, we encourage you to speak with one of our experienced agents. We would be happy to help! In the meantime, please check out our blog for more informative articles like this one.

Thank you for reading!!!

Independent Agents vs Captive Agents

Posted on by Marc Zettl

When looking for insurance, it can be incredibly stressful trying to decide which provider is right for you and your family. The entire process can be overwhelming, from narrowing down a provider, to getting the right coverage you need, and of course trying to stay within an affordable budget. Many people do not even know where to begin, and if that’s how you feel, don’t worry, you’re not alone.

This is where insurance agents come into play. First, let’s go over the difference between a captive insurance agent versus an independent insurance agent. A captive insurance agent is contracted to work for one insurance company and can only sell that one specific company’s policy (West Bend, n.d.). For example, if you reach out to a Nationwide insurance agent, they would only be able to get you quotes with Nationwide. Whereas an independent insurance agent is contracted to work with a variety of insurance companies and can sell policies from multiple providers (West Bend, n.d.). For example, if you reach out to us here at ASZ International, Inc., we can get you quotes from many different carriers like Nationwide, Lemonade, Erie, Travelers, and more, and then we compare them, apples to apples for you. This way you know exactly what each company has to offer, and it allows you to make a more educated decision on which policy is absolutely right for you.

Working with an independent insurance agent, in our opinion, is much more beneficial. Not only does your agent have the ability to go to different carriers who sometimes vary in the coverage they provide, but they can also shop around for you to see where they can get you the right coverage at the most affordable price. Another benefit is that when it comes time for your renewal, your agent will keep an eye out to see if they can get you a cheaper rate with another carrier. If they can, they’ll switch your coverage over and continue to be your assigned rep. Which leads me to another benefit of working with an independent insurance agency, not having to wait on hold or talk to a 1-800 representative. Instead, you get to call a real person, who is there to support, educate, and guide you throughout the whole process.

Here at ASZ International, that is exactly the kind of people we strive to be. We are here to work with you and for you. We don’t work for any specific insurance company, that’s not our job. Our job is to help you, the policy holder.



Reference:
West Bend. (n.d.) Does Your Insurance Agent Have Your Best Interests At Heart? The Silver Lining. https://www.thesilverlining.com/common-topics/independent-agents-versus-captive-agents


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