Insurance Industry Faces Hard Market

The insurance industry has entered what is commonly referred to as a “hard market.”  Due to an unusual convergence of market trends and disruptive events such as supply chain issues and historic inflation, you will likely see an increase in the cost of your home and auto insurance when it comes time to renew your policies.  Please review the information shared below, which explains the changing rate environment and questions you may have.

Why are insurance rates continuing to rise in 2023?

Insurance rates are based on what an insurer thinks it will cost to make you whole in the event of a loss—whether it is roof damage during a windstorm or a vehicle totaled during a traffic accident. As you have likely noticed, pretty much everything costs more than it did even a few years ago.

What is driving higher home insurance rates?

Last year, the cost of building materials rose 4.7%, on top of double digit increases in the previous two years, including a strong uptick in prices on things like asphalt shingles (16.2%), concrete blocks (18.5%), and drywall (20.4%). (Source: CoreLogic)

Additionally, the home-building industry is facing a shortfall of more than 300,000 skilled laborers, which is driving up construction-related labor costs. These issues combined have made home claims much more expensive. (Source: Home Builders Institute)

What is driving higher auto insurance rates?

Ongoing supply chain issues are driving a shortage of car parts and equipment, which were 22.3% more expensive at the end of 2022 than they were two years earlier. The overall cost of repairing vehicles has increased 18.4 % over the same time—exacerbated by a growing shortage of car repair technicians. (Sources: Consumer Price Index, 2022 TechForce Foundation Technician Supply & Demand Report) 

The same issues are dramatically affecting the cost to replace new and used vehicles. The average price of new cars has risen 20% since 2020, while used car prices have skyrocketed 37%. (Sources: Federal Reserve Bank of St. Louis, Consumer Price Index) 

I have had no claims. Why are my premiums increasing?

Hard market premium increases are not tied to a specific customer’s coverage, but to the overall increased cost of claims for all insureds.

How can Kish Insurance help manage my insurance costs in a hard market?

As an independent insurance agency, Kish Insurance is not tied to just one insurance company. You should consider your agent to be your valuable, trusted resource who can help you navigate the current market conditions. Kish Insurance has long-standing, profitable relationships with the carriers it represents and is well positioned to find coverage for your risks and to advocate on your behalf.

How can I manage my insurance costs in a hard market?

It is a good idea to review your policy with your agent so you understand what coverage you have and need. If changing insurers is a viable solution, our agents will advise you of any potential effect it may have on your coverage or your risk profile. However, remember that prices/premiums are going up in a hard market. A more competitive rate from another carrier may mean that that carrier has not increased their rates yet but may do so soon. Using risk management strategies can reduce your exposure and make you a more attractive insured. You can also reduce premium costs by selecting a higher deductible. Installing protection devices such as a central station fire and burglary alarm system can create additional discounts on your policy’s premium. Finally, paying your premium on or before the due date is essential and ensures your policy will continue to without a lapse in coverage or potential cancellation.

How long will this hard market last?

Like the economy, hard insurance markets are cyclical. A hard market will vary in length and severity, depending on prevailing economic challenges, inflation rates, and the types of insurance affected. At Kish insurance, we strive to be your valued partner and are here to help you navigate the current market conditions. Our goal is to help you weather this market. Kish understands the difficulties that accompany premium increases and limited coverage availability and will work hard to reduce the effects on you.

If you’re shopping around for any type of insurance policy, connect with our agents at Kish Insurance. As an independent agency, we offer a wide array of quality products and multi-policy discounts that will properly insure and minimize your risk, at a price that still works for you. Contact us today to learn more or Request a Quote online.