People ask this question every time their insurance bill arrives, and there are multiple factors that influence rate. Average property repair/replacement costs were up 16.4% last year – almost double that of the consumer price index. Claims costs have increased due to higher frequency of litigation, broader liability definitions and legal decisions, including higher compensatory awards, favoring plaintiffs – particularly in high litigation states such as California. Additionally, the cost of cars, both new and used along with repair expenses have increased significantly since the start of the pandemic and while used cars process have come down on the wholesale side, the retail side has remained high. Add to these factors increased catastrophic weather events and cyber-attacks the insurance industry experienced $3.8 billion net underwriting losses in 2021 with combined loss ratios in the industry trending well above 100% in 2022. Essentially, for every $1 of premium collected insurance companies are paying out greater than $1 in expenses. These factors have resulted in many carriers closing for new business and tightening underwriting for existing business along with seeking rate relief.
Partial good news in California is that rates have remained relatively in check, due in large part to an active department of insurance. Overall California has some of the lowest rates in the country. This said, the ultimate defense against higher insurance premiums is to SHOP your policies when you receive your renewal with your best bet calling an independent agency representing multiple carriers as this will result in the greatest number of options! Crusberg-Decker will truly appreciate the opportunity!
Thank you!
By Scott Decker, Crusberg-Decker Insurance Services