Insights From Our Founder: Addressing Current Challenges in the Evolving Insurance Industry
The insurance landscape is rapidly evolving, and it's impacting everyone, especially those seeking home and auto coverage. This isn't just a regional issue; it's happening across the country, with particular intensity in states like California, Florida, Louisiana, and Texas.
Insurance carriers are facing unprecedented challenges, leading them to make some tough decisions. Many have halted new policy issuance altogether, while others are exiting the market or merging with other carriers. It's simply become extremely difficult to operate profitably in this inflationary market.
Every day seems to bring news of more carriers pausing new business or imposing full stops on writing new policies. Some even require upfront full premium payment or impose 20 to 30-day application holds. Underwriting guidelines are shifting, favoring preferred business with no claims within the past 5 years.
The insurance market is in upheaval, and it will affect you, if it hasn't already. Premiums are skyrocketing, doubling or even tripling compared to the previous year. The surge in claims costs, driven by materials and labor expenses, as well as higher frequency has compelled carriers to raise rates or withdraw from certain markets. In some states, carriers are unable to get rate increases approved by regulatory agencies, leading them to halt new business.
If you have auto or home insurance, your rates have gone up or will inevitably rise. It's not personal; it's the cost of doing business. Home reconstruction costs are soaring due to material and labor costs, while auto repairs are becoming pricier with advanced technology integration. Medical expenses, litigation costs, and accident rates are all contributing to this challenging environment.
Reinsurance, the safety net for insurance carriers, is reaching its limits in many markets, causing unsustainable rate increases. This pricing correction is expected to continue at least until 2024.
In the midst of this insurance market turbulence, there are steps you can take to navigate it:
✅ Consider Higher Deductibles to save on your policy.
✅ Explore Safe Driving Telematic Programs for discounts.
✅ Review available Discounts with your agent to maximize savings.
✅ Avoid policy cancellations; carriers are less lenient with reinstatements.
✅ Bundle Auto and Home insurance for discounts and stability.
✅ Prioritize tenure with a carrier; it can impact your eligibility.
✅ Adhere to traffic laws to avoid rate-increasing tickets.
✅ Manage small claims and save coverage for catastrophic losses.
Remember, your insurance agent or agencies are here to guide you through these changes and help you find the best insurance for your needs. We're working diligently to adapt to the evolving marketplace.