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2023-02-27
By: Advocate Brokerage
Insurance rates for Automobiles, Homes & Excess Liability have been on the rise for quite some time.
We believe in providing as much information as possible to better educate our clients so that they can make informed decisions when it comes to their insurance. We do our best to share our expertise with you which is why we put together this blog article to share some of the key factors impacting the insurance industry and the rate increases we are seeing across the board.
Repair Costs Are Higher Due To Increased Technology In Vehicles
Every component in today’s high-tech vehicles are connected to another component making simple part replacements a thing of the past. Each repair becomes a major repair and thus the cost of repairs grows.
Supply Chain Issues Make Replacement Costs More Expensive
Supply chain delays stem far beyond modern vehicles with semiconductor chips. Everything from brakes, exhaust systems, engines, and basic plastic parts that feed the auto industry has been challenging to access.
Auto Repairs Are More Expensive Due To A Lack Of Skilled Labor
The auto repair industry is struggling to find skilled laborers. In order to attract new talent repair shops have been raising wages which in turn results in a higher cost for repairs.
Accidents Due To Distracted Driving And Speeding Are On The Rise
64% of all road accidents in the US involve distracted driving.
Increased Frequency Of Severe Weather
In the last 5 years, the US has seen 79 severe weather events with $1 billion dollars in damage. That is an average of 16 events per year.
Supply Chain Issues
Costs for materials have increased due to inflation and supply chain disruptions. This has had an impact replacement cost values and required an increase in insurance coverage limits.
More Luxury Homes
The increase in luxury homes being built with custom details leads to a higher replacement cost when damage occurs.
Shortage of Skilled Construction Laborers
Employers across the country are finding it difficult to find skilled workers and the construction industry is no exception. Many construction companies are paying higher wages for skilled labor which causes the cost of repairs and restorations to increase.
Insurance companies insure themselves by buying reinsurance. Reinsurance protects you by making sure the insurance carriers remain financially solvent. Most reinsurance companies are reporting that US results for the last 5 years have been abysmal. As a result, reinsurance rates have drastically increased during the last few years and we believe reinsurance rates will continue to increase 25-40% in 2023. These increases result in a greater cost to the carrier to insure their policies.
Social Inflation Has Resulted In Rapid Increases In Claim Costs
Social inflation is a term used to describe the elements that impact excess liability insurance rates. The court of public opinion (fueled by social media and the media in general) is believed to be making an impact on the way a jury comes to a decision. When a jury distrusts larger corporations and makes decisions based on emotions rather than facts, larger settlements are awarded.
Medical Cost Inflation
Inflation is an issue in nearly every industry. The medical industry is no exception. We’ve seen an average increase in Medical Costs of 4.6% from January 2020 to November of 2022.
Increase In Average Jury Awards
The average jury award reached an all-time record high of $2.5 million in 2020. That is an increase of 39% from 2019.
We understand that no one wants to see a significant increase in their insurance rates. We strive to find the best solutions for our clients, presenting coverage that is needed and doesn’t leave you vulnerable should a loss occur. We do our best to recommend coverage that truly has your best interest at heart. If you have any questions or concerns, about your rates, we always encourage you to get in touch with us at 914-723-7100. Our team is always here for you!
