Understanding the Rising Costs of Insurance Premiums
Over the past few years, you may have noticed that your insurance premiums have been increasing steadily, even if you haven’t made any claims. This trend is not isolated but reflects changes across the entire insurance market. At Andres O’Neil & Lowe Insurance Agency, we want to help you understand the factors driving these increases so you can feel informed and confident in your coverage decisions.
Key Drivers of Premium Increases
1. Increased Claims Frequency and Severity
Natural disasters, accidents, and other catastrophic events are occurring more frequently and with greater intensity. These events, such as hurricanes, wildfires, and flooding, result in billions of dollars in insured losses each year. With more frequent and severe claims, insurers must adjust premiums to cover these rising costs.
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For example, insured losses from natural disasters totaled $110 billion in 2021 alone.
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In Ohio alone, the average number of weather/climate events has increased from 2.1 events to 5.6 events, each exceeding $1 billion in losses.
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Wildfires and hurricanes have caused record-breaking damage, driving up home insurance rates in affected regions.
2. Rising Costs of Goods and Services
Inflation is another major factor pushing insurance premiums higher. The cost of goods and services has increased significantly, affecting repairs, medical bills, and property replacements.
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Auto insurance premiums are rising as the cost of vehicle repairs has increased by 25% since 2020, due to the higher price of parts and labor.
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Home insurance premiums are also affected as construction materials and labor have become 36% more expensive since the pandemic.
3. Litigation and Legal Costs
The frequency and severity of lawsuits in certain areas have led to rising legal costs for insurers. When insurers face legal challenges, the cost of defending claims and settling lawsuits can be passed along to policyholders in the form of higher premiums. This is especially true for liability coverage in areas like auto insurance and business insurance.
4. Reinsurance Costs
Insurers often purchase reinsurance to protect themselves from large losses due to catastrophic events. However, as these events have become more frequent and severe, reinsurance costs have increased, leading to higher premiums for policyholders. Reinsurance costs have risen by as much as 30% since 2021, directly impacting policyholder rates.
How Andres O’Neil & Lowe Can Help
At AOL Insurance, we understand that rising insurance premiums can be frustrating. While we can’t control the broader economic forces and natural disasters contributing to these increases, we are committed to helping you manage your insurance costs by:
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Reviewing your policies annually to ensure you’re receiving the best coverage for your needs and eliminating unnecessary expenses.
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Offering risk management tips to reduce the likelihood of claims, which can help keep premiums down over time.
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Working with a broad range of insurance providers, allowing us to compare rates and find the most competitive premiums for you.
Understanding why insurance premiums are increasing can make the experience less stressful. As your insurance partner, we are here to help you navigate these challenges and ensure you’re adequately protected without overpaying.
If you have any questions about your coverage or want to review your policies, don’t hesitate to reach out to our team at Andres O’Neil & Lowe Insurance Agency. We are here to help you protect what matters most.
Sources: agc.org, news.ambest.com, aon.com, risk.lexisnexis.com, bls.gov, nahb.org, globallegalpost.com, iii.org, insurancebusinessmag.com, propertycasualty30.com, reuters.com, swissre.com, uschamber.com, whitehouse.gov, ncei.noaa.gov
