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Navigating the Hard Times

By January 24, 2024No Comments

Happy 2024! New goals and new resolutions categorize the start of every new year. We desire adventure, excitement, and revitalization, but now more than ever we also crave consistency and a sense of normalcy. The past 4 years have been a mixture of chaos, re-discovery, reconnection and getting back to basics. While all change isn’t terrible, there have been some changes in the economy that are ruffling feathers BIG time. The insurance industry has been famous for a long period of time for acting a certain way. Lower premiums, leniency on late payments, and exceptions to the rule have characterized the way we view insurance. But the past year especially seems to be turning its back on what we thought we knew, and a different way of insurance has emerged. Let’s take a quick look at what we are seeing in the insurance market today, keeping in mind that these changes are necessary and helpful in the long run.

Enter the debate of a hard market vs. soft market. The past 15+ years, we have experienced and thoroughly enjoyed a soft market. Characteristics of a soft market are lower insurance premiums, broader coverage available to the public, more relaxed underwriting criteria, and increased capacity. This is the market consumers thrive and tell their friends about! In 2022, we started to enter a hard market. Characteristics of the hard market are higher insurance premiums, more strict underwriting criteria and reduced capacity to write insurance policies. So why the seemingly sudden switch?

  1. CAT(catastrophic) losses within the past 2 years across the country. Usually, CAT losses happen 1-2 times a year and not in the same location. We are seeing record breaking frequency of these type of losses and severity. The tornadoes in Kentucky, hurricanes in Florida/Georgia/Alabama/South Carolina, fires in Oregon/California, hailstorms in the Midwest and the list is quickly growing. When so many losses hit all within a year, not only does it drastically impact homeowners, but the insurance companies are also paying out billions of dollars to help you become whole. The amount of recovery paid out from 2021 has increased over $5 billion.
  2. Inflation of building materials and labor costs. Our economy affects our insurance premium. As the cost of building materials increases, so does the replacement cost on your home. As labor costs increase to rebuild a home or repair a car, insurance must take account for that in the payout of a loss.
  3. Medical insurance costs have increased. Whether someone is injured in a house fire, or a 4 car pile up on the highway, insurance companies want to ensure everyone’s safety and repair. In doing that, ER visit costs have increased, medical supplies and medicine have increase and your insurance carrier also must factor that in.

We’ve been blessed to be in a soft market for a long time!!! Insurance companies expect some inflation so in the past they’ve taken small rate increases here and there. When economic inflation + CAT losses take an unprecedented increase, the premium that was previously in a soft market is not enough! The consumers feel like they’ve been punched in the gut, and it feels like all you-know-what broke loose! Insurance carriers have no choice but to increase their rates and it seems 100% unfair.

Now let’s get personal. As a licensed agent and account manager, I completely understand the frustration of budgeting for a $100 increase and my renewal comes in the mail and bam! The increase is now $250! I understand the frustration of being claim free and feeling like your premium isn’t fair. I understand that most incomes aren’t increasing at the rate that inflation is.

Please know that I hear you, I see you, and I recognize where you are at. Agents across the nation are working hard to find ways to help you save! Before you panic, review your past insurance year, and ask yourself the following:

  1. Did I file any sort of claim?
  2. Did I add a youthful driver?
  3. Did I make any changes to my policy that resulted in an increase in premiums? (add vehicle/increase coverages/increase dwelling amount due to renovations?)
  4. Did I loose a multi policy discount?
  5. Did I move?

If the answer to any of these is yes, it will affect your premium, that’s the honest bottom line. If the answer to any of these is no and you still can’t understand the increase, KINDLY talk to your agent, keeping in mind the hard market discussed above. We will work to make sure you are receiving all applicable discounts as well as offer you additional solutions such as increasing the deductible and making sure your roof year is up to date. We are all in this together. We will do our best within what we are allowed to do. Even in this hard market, let’s keep our hearts soft and kind towards one another. Call or email us if you have any questions or concerns about your coverage. We’re here to provide Peace of Mind. 574.231.6596 or