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The Hardening of the Personal Insurance Market

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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).

The Basics and Benefits of Insurance

Let’s talk about insurance, and why it’s so important. Do you own a home, apartment, vehicle, or any type of personal belongings? If you do, then you want to make sure those things are protected in case of a loss. When you buy insurance, you’re transferring the cost of a potential loss or accident to the insurance company in exchange for a fee. You’re buying yourself protection at a fraction of the price of what it would cost to get back those belongings. If you suffer a loss that is covered by your policy and you file a claim, insurance is there to help you pay for that loss based on the terms of your policy (Grange Insurance, n.d.).

Insurance not only provides protection against theft and damage from perils like fire and water, but it also protects you from the financial responsibility that could result from a visitor or guest being accidentally injured on your property. In a nutshell, insurance is very important. Though it is something you hope you never have to use, because nobody wants something bad to happen to them, it is something that you don’t want to be without if you end up suffering a loss.

So how does insurance work? When you purchase insurance, you are known as the policyholder. When multiple policyholders purchase insurance with the same insurance company/carrier, the insurance company uses the money collected from the policyholders and other investments, to pay for its operations and claims made by its policyholders (Grange Insurance, n.d.). So when you buy insurance, the payments you make are in exchange for being covered from certain risks (Araujo, 2021).

Next, we’ll dive into how to choose the right insurance provider for you and your family.


References:
Araujo, Mila. (2021, July 12). Get the Basics to Learn How Insurance Works. The Balance. https://www.thebalance.com/basics-to-help-you-understand-how-insurance-works-4783595


Grange Insurance. (n.d.). What is insurance and why is it important? The Grange Guide to Insurance. https://www.grangeinsurance.com/tips/what-is-insurance-why-is-it-important


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  • Zurich
  • Abacus
  • Aetna
  • AIG
  • American Modern Insurance
  • AmTrust
  • American Modern Insurance
  • Attune
  • biBerk
  • Chubb
  • Cigna
  • Citizens
  • CNA
  • Coterie
  • Cowbell Cyber
  • CV Starr
  • Employers
  • Erie
  • Fast Comp
  • Flood Risk Solutions
  • Foremost
  • Foremost Star
  • Great American
  • Guard
  • Hagerty
  • Hanover
  • Hiscox
  • Jewelers Mutual
  • JIBNA
  • K&K
  • Lemonade
  • Liberty Mutual
  • MetLife
  • Nationwide
  • Neptune Flood
  • AIG
  • NYSIF
  • Onust
  • Openly
  • OpenTrack
  • Prime Insurance Company
  • Progressive
  • Pure Insurance
  • RLI
  • Safeco
  • Selective Insurance
  • ShelterPoint
  • Standard Security
  • The Hartford
  • Thimble
  • Travelers
  • US Assure
  • USLI
  • V3ins.com

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