What you need to know about the rising cost of your insurance

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What you need to know about the rising cost of your insurance

Your partnership with us at BWO Insurance Group means the world to us, especially during these challenging economic times. We understand the concerns surrounding fluctuating rates and coverage adjustments. Allow us to shed some light on what is driving these changes:

  • Underwriting Challenges: Economic pressures compel insurance carriers to reassess risk accurately, often resulting in necessary rate adjustments to remain competitive. While the past decade offered rate stability, current financial and environmental conditions require adaptive measures.
    • Supply chain disruptions can also influence insurance pricing. Inflationary pressures can drive up the cost of goods and services, including repairs and medical treatments, which in turn affects insurance claim payouts and premiums.
    • Underwriting and Loss Ratios: Insurers closely monitor their underwriting and loss ratios, which represent the ratio of claims paid to premiums earned. If an insurer experiences a higher-than-expected number of claims or severe losses, they may adjust premiums across the board to maintain profitability and financial stability.
    • Investment Income: Insurers typically invest premiums to generate income. When interest rates are low, insurers may raise premiums to offset lower investment returns.
  • The Cost of Living: With everything from groceries to gas getting pricier, insurance costs are no exception. Inflation exerts significant influence on insurance costs due to increased expenses in parts and labor. Adequate coverage allowances are crucial to prevent unexpected out-of-pocket expenses for policyholders.
    • Auto Insurance: The advancement of technology in vehicles has led to more expensive repairs. Additionally, distracted driving, mobile devices and an increase in severe weather events contribute to a higher number of accidents and claims. Rising medical costs for injuries all contribute to elevated risk profiles for insurers.
    • Home Insurance: Similarly, for home insurance, the frequency and severity of natural disasters like tornado’s, hurricanes, wildfires, and floods have escalated, leading insurers to adjust their pricing models to reflect these heightened risks.
  • Climate change has resulted in more frequent and intense natural disasters. These events cause significant damage to homes, leading to higher claim payouts. Elevated property insurance claims, attributed to extreme weather events and property value increments, contribute to higher settlement costs. These factors may prompt alterations to coverage terms to accommodate the evolving landscape.
    • One example of climate change: From 6/10-6/19/2023 there were over 1,000 hailstorms in the center of the US. No costal geography factored in.  The insurance industry paid out 5.5 billion in damage in 9 days.
  • Regulatory and legal factors: Changes in regulations and legal environments can impact insurance costs. For example:
    • Auto Insurance: Legal reform requirements, changes in no-fault insurance laws or increased minimum coverage requirements, can lead to higher premiums.
    • Umbrella Insurance: With an increase in high-profile lawsuits and larger jury awards, insurers face higher risks, resulting in higher premiums for umbrella policies.

    We acknowledge that rising premiums may raise concerns. However, please rest assured that we are dedicated to securing the best coverage at competitive rates for you, but without compromising on quality. Our commitment extends to exploring avenues to mitigate costs while delivering top-tier service.  Please reach out to your BWO agent for any questions you may have regarding your policies with BWO Insurance.

    Click The Link Below To See A Related Article On Reuters.

    Soaring insurance costs hit as US buyers finally get a break on car prices

BWO Insurance Oak Creek location will be closed on Monday, May 27th in observance of Memorial Day.

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