The steady rise of insurance premiums has become a growing concern, placing financial strain on individuals and businesses alike. This has left some questioning…
Why is this happening?
What factors are contributing to these changes?
What does the future of my insurance look like?
How can I mitigate the impact of rising insurance premiums?
As insurance professionals, we understand that the increase in premium costs can understandably raise concerns among our clients. That’s why HAWK is here to address your inquiries and provide expert guidance regarding the reasons behind this increase, the factors contributing to these inflationary trends, and the proactive measures we all can take to ensure your security during uncertain times.
| Addressing the WHY
Put simply, the increase in your premiums can be attributed to inflation. Regardless of whether you have filed a claim or not, the costs for your home and auto insurance are steadily rising.
“A dramatic increase in the cost of insurance in the past year, driven by inflation, is impacting customer loyalty, with an 11.8% rise in insurance quote rates and 3.6% of consumers switching insurance companies from Q1 to Q2, according to a new study by JD Power” (Digital Insurance).
You might be wondering, “Where are the facts? Is my insurance agency fabricating all of this?” Don’t worry, your insurance company isn’t trying to hoard all your money for themselves. They are simply adjusting their rates to keep up with inflation and changes in the economy.
Some of the leading causes of the rise in your premium are natural disasters, changes in the market, and location. On average, this increase varies from anywhere from “4% to as high as 12%” on average, according to ReShield.
In determining these premiums, insurance companies assess numerous factors, such as the number of claims and costs to repair automotives and homes. Let’s examine certain areas of coverage and discuss the specific changes that are taking place.
- Auto Insurance
Your auto coverage is most susceptible to inflationary trends, seeing as auto insurance inflation rates are up by 17% despite the decrease in automotive prices in 2023. These changes in price are largely due to the higher crash frequency during the pandemic and the cost to repair said automobiles. Collectively, the rise in premiums is attributed to a combination of factors including location, instances of faulty driving, vehicle repairs, and potential property and medical costs.
- Home Insurance
Just like your auto insurance, homeowners can expect a 7% increase following last year’s 12.6% increase according to S&P Global Market Intelligence. These changes are most affected by your location and your history of exposure to weather-related events, dwelling coverage, credit or claims history, and the age of your home.
| What’s Next?
Now that your premium has gone up, what can you do? What are the next steps to addressing this change in your policy? Here are a few of the ways you can take on inflation with HAWK:
- Review your policy – Dedicate some time to thoroughly analyze your policy and gain a clear understanding of the reasons behind the increase.
- Contact HAWK – If you have questions regarding your premium, a HAWK agent will give you a detailed explanation or provide you with options on reducing your premium costs.
- Adjust your coverage – Increasing deductibles or reducing certain coverage options are a few ways to lower your premiums (however, make sure to talk with a HAWK agent to make sure you have adequate coverage for your needs).
- Discuss ways to improve your risk profile – Take steps to improve your driving record, credit score, or claims history. Ask if you qualify for any home or auto insurance discounts.
One unfavorable industry trend that coincides with times of uncertainty is insurance hopping from one company to another in exchange for a lower rate. While switching agencies might offer short-term rate improvements, giving your current provider the opportunity to make a true value or cost-benefit comparison may save you from comprising valuable coverage that may be critical to your financial security.
Sticking with your insurance provider may improve outcomes in the event of a loss by means of equity in the form of loss trends and historical profitability. We often get asked by underwriting, “how long the applicant has been with their present carrier” – it’s certainly an underwriting pre-qualifier, if nothing else.
So, what can you do now? Now that you have all the facts, schedule a call with HAWK – let us answer any unanswered questions you have!
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