Navigating the Hard Insurance Market:

If your insurance premiums have felt like a punch to the gut lately, you're not alone. The insurance industry is in the midst of a "hard market," a period marked by rising rates, stricter underwriting guidelines, and limited coverage options. Let's break down what's happening and how you can navigate these choppy waters.

Why Are Rates Skyrocketing?

Several factors are contributing to the current hard market:

1. Increased Claims Costs: Natural disasters, inflation, supply chain disruptions, and rising medical costs have all led to more expensive claims. Insurance companies are paying out more, which drives up premiums for everyone.

2. Reinsurance Costs: Insurance companies buy their own insurance (called reinsurance) to protect against catastrophic losses. Reinsurance rates have also increased, further pressuring premiums.

3. Investment Challenges: Low interest rates and volatile markets have made it harder for insurers to generate investment income, which traditionally helps offset underwriting losses.

4. Inflation: The rising cost of goods and services impacts everything, including the cost of repairing or replacing your insured property.

Tightening Underwriting Guidelines

Insurance companies are becoming more selective about who they insure and what they cover. This means:

• Stricter Eligibility Requirements: You might find it harder to get coverage if you have a history of claims, especially recent ones.

• Reduced Coverage Options: Certain types of coverage might become more limited or expensive, and some risks might become harder to insure.

• Scrutiny of Minor Claims: Insurers are paying close attention to smaller claims, like windshield replacements or roadside assistance calls. These can be seen as indicators of future claims risk.

How Claims Impact Your Rates

Your claims history is a significant factor in determining your insurance rates. The more claims you file, the higher your perceived risk, and the more you'll likely pay. Here's what insurers are watching:

• Frequency of Claims: Even small claims can add up and signal a higher likelihood of future claims.

• Severity of Claims: Larger claims, especially those involving significant property damage or injury, will have a more substantial impact on your rates.

• Type of Claims: Some claims are seen as more predictive of future risk than others. For instance, multiple windshield or roadside assistance claims might raise concerns about the possibility of you filing additional and even larger claims.

Remember: Insurance is a safety net,
not a maintenance plan.

Use it wisely to protect your financial well-being in the face of unexpected events.

Have any questions for us? Contact us at 643 Insurance today and experience the difference of an agency who aims to position their clients the best to keep their rates as stable as possible in these uncertain times. Your future self will thank you.

Subscribe to our newsletter!