Main causes of rising insurance rates
Inflation:
-Home
As the cost of living continues to rise, insurance companies must adjust their rates to keep up with the increased expenses. This includes higher costs for labor, materials, and medical services, which directly impact insurance premiums.
Rising supply costs are exacerbated by construction delays from unpredictable supply levels
Building materials cost increase since February 2020
- Concrete products- 29% increase
- Insulation materials- 35% increase
- Lumber and wood products 29% increase
- Asphalt, siding products 33% increase
- Copper wire and cable 40% increase
–Auto
Personal insurance in the U.S. had an estimated underwriting loss of $34.9 billion for 2022, the main factor in a 5 year high underwriting loss for the overall industry. The deterioration in the personal auto line was primarily responsible for the much larger underwriting loss in 2022 than in 2021. Auto insurance rates that lagged behind the Consumer Price Index costs of materials, labor, medical care, and technology exacerbated the problem.
Consumer Price Index Jan 2020- Jan 2023
- CPI for auto parts increased 32%
- CPI for auto repairs increased by 24%
- CPI for auto insurance increased by 7%
Increased Claims: The frequency and severity of insurance claims have been on the rise. Factors such as extreme weather events, accidents, and other unforeseen circumstances have led to a surge in claims, resulting in higher costs for insurance providers.
Technological Advancements: While technology has undoubtedly improved our lives, it has also introduced new risks. Cybersecurity threats, data breaches, and other technology-related risks have become more prevalent, leading to increased insurance costs to mitigate these potential losses.
Legal and Regulatory Changes: Changes in laws and regulations can have a significant impact on insurance rates. New legislation may require insurers to provide additional coverage or increase the minimum coverage limits, which can result in higher premiums for policyholders.
At our company, we are committed to helping our clients navigate these changes and find the most suitable insurance coverage at competitive rates. We continuously monitor the market and work closely with our clients to ensure they have the necessary coverage while optimizing their insurance costs.
If you have any questions or concerns regarding your insurance rates or coverage, please call us at 708-845-5466 or visit our website www.meritinsurancegroup.com We are here to assist you and provide the necessary guidance.
