Insurance rates are rising across the board, but why? And what can you do about it?
Joe Kuchinka, President & CEO of Proverus, Inc. explains what is causing rates hikes as much as 70% across many carriers. The market conditions are unlike anything we’ve seen in our industry before, and there are three key factors affecting the state of the insurance industry today. It’s a complex topic, but Joe breaks it down into in this article and the accompanying video.
3 Key Factors Affecting The State of the Insurance Industry
1. Frequency of Claims
Alarming Increase in Catastrophic Weather-Related Damages
In the first 10 months of 2023, there were a total of 25 catastrophic weather-related events that each resulted in over $1 billion worth of property damages. This is three times the 30-year average and has caused a ripple effect in the insurance industry, affecting rates, coverage forms and more.
2. Increased Cost for Repairs
Inflation & Bloated Contractor Pricing Causing Costs to Skyrocket Increase in Catastrophic Weather-Related Damages
There are several factors contributing to the significant increase in repair costs over the past few years. First, inflationary material and wage increases have more than doubled the costs. Second, knowing an insurance claim will cover their bill, some contractors have also bloated their pricing, making it challenging for insurance companies to cover expenses at current insurance rates.
3. Global Reinsurance Shortage
The Relationship Between Insurance & Reinsurance Companies Has Changed
Insurance providers purchase coverage from reinsurance companies to mitigate their own risk. Unfortunately, with the rise in catastrophic events, reinsurance rates have significantly increased. In addition, the “deductibles” for these reinsurance policies have increased as well, forcing the insurance companies to carry higher reserves. Both these increases ultimately work together to significantly increase the rates for you the customer.
Want to learn more?
Hear Joe Kuchinka explain in further details in this insightful video: Watch now or click image