As we entered into 2023, many people noticed a significant increase in their insurance rates. We understand that it can be frustrating to see your insurance premiums increase without knowing why or how to reduce them. There are several factors that may be contributing to the rise in insurance premiums, including these;
Rising Costs of Insurance Claims
Insurance companies need to charge premiums that cover the costs of providing coverage. With the increasing number and severity of insurance claims, the costs of providing coverage have also gone up. Insurance companies are increasing rates to keep up with this “new normal”
Increase in the Number and Severity of Storms
The Midwest has experienced a record number of wind and hail storms over the past few years. Natural disasters such as hurricanes, wildfires, and floods have also become more frequent and severe in recent years. This has led to an increase in insurance claims and, subsequently, an increase in insurance premiums.
Higher Medical Costs
Healthcare costs are rising, which has led to higher medical claims. As medical claims increase, insurance companies must charge higher premiums to cover the costs.
Cost of Building Materials
The cost of building materials has risen in recent years due to supply chain disruptions, inflation, and increased demand. This has led to an increase in property insurance premiums. Read more about this here.
Driving Habits Returned to Pre-Pandemic
As driving habits return to pre-pandemic levels, auto insurance costs are increasing. This is because the more people are on the road, the higher the chances of accidents, which can lead to insurance claims and payouts by insurance companies. Read more about this here.
In conclusion, while the increase in insurance rates may be frustrating, being aware of the underlying reasons and taking proactive steps can help mitigate the impact.
Wondering what steps you can take to lower your insurance premiums?
Updated: May 4, 2023
