The insurance marketplace is tightening up and it’s happening fast for home and auto insurance companies, regardless of where you live. California, Florida, Louisiana and Texas are being hit especially hard.
Insurance carriers are limiting or not issuing any new policies across the country. Some carriers are actually just leaving the market or they are selling to other carriers or merging. They simply cannot operate profitably in this inflationary market. EVERY DAY we are hearing about a pause on new business or a carrier putting a full stop on writing new policies. Some carriers are requiring full premium payment up front for new business or requiring a 20 to 30 day hold on new applications. Carriers may shift underwriting guidelines, so they only want preferred business… no claims within 5 years (not 3 anymore). Some carriers will NOT reinstate coverage if it lapses, no matter the reason.
The insurance market is disrupted and it WILL affect you. If it hasn’t yet, it will. We have seen premiums double and triple what they were the year before.
If you have an auto or home insurance policy, your rates have gone up, and if they haven’t, they will. 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. If you have not gotten a rate increase, be prepared, it will come.
Why?
The cost of claims has risen exponentially in the past 2-3 years, resulting in the carriers having to raise premiums or pull out of some markets. In some states, carriers have applied for rate increases, but have not been able to get them approved, so they simply shut down for new business.
The cost to rebuild your home is up dramatically due to rising cost of materials and labor. Supply chain for materials continues to be an issue. We can all agree that everything has increased in price. Carriers simply can’t survive paying these higher prices without charging more themselves.
The cost to repair your car has increased 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 or windshield used to be $500, now it’s more than triple that. Your vehicle may not be new but the car you might have an accident with very well could be.
The cost of medical care continues to skyrocket. Bodily injury and hospital costs on auto accidents have increased dramatically.
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.
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, and pricing correction is not anticipated at least through 2024.
What can you do?
There are some things you can do to help moderate your costs in this current insurance market:
Consider Higher Deductibles.
This will help save some money on your policy.
Use Safe Driving Telematic Programs.
Telematics can reward you by giving you a discount for good driving.
Take advantage of 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.
DO NOT let your policy cancel or lapse for any reason.
Carriers are not reinstating coverage as easily as they once did. If it does cancel, the carrier may require premium in full before reinstating.
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 10-15% (or more).
Consider tenure.
Switching 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. Carriers are non-renewing 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.
Drive Safely.
Driving activity such as tickets and accidents can really add rate to your policy and stay on your record 3-5 years, depending on the carrier.
Absorb small claims when you’re able.
Save coverage for catastrophic losses. Talk with your agent and let them counsel you should a loss occur.
Stop using your towing or roadside assistance as a maintenance policy.
Frequency of claims REALLY matters. Carriers watch this closely.
Buy your insurance from an experienced Independent Insurance Broker that has options and can help you navigate the current market WITHOUT SACRIFICING COVERAGE.
Lowering coverages could ultimately cost you more money in a loss.
Lastly, please remember that we are agents for the carriers. 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 cancelled by the carriers. We are here to help educate, make sure you have the best insurance for your situation, manage your account with the carrier, and claims counsel when needed.
We are doing our best to manage carrier changes with client needs.
I hope this message explains a little bit of what is going on in the insurance marketplace. Please be patient with your insurance agent – they are taking the same increases, navigating carrier changes and doing their best to help you through this.
Thank you to some really smart agents that helped put this together. Please share with your friends.
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