Let’s start with the obvious: inflation isn’t transitory, and it isn’t just a buzzword; it is making its presence felt across the country. Before we address how the current landscape of the country and world may impact your insurance, let’s quickly recall some other reasons why your insurance may be impacted:
- You filed a claim last year
- You live in a state that experienced significant weather events
- You were cited for a moving violation
- Your insurance score (tied to credit) fell
Now that we have those general reasons stated, let’s focus on some current issues that will likely impact your insurance:
- The cost of construction is way up. Most insurance carriers are increasing your property limits at renewal. If they are insuring your building for more, they are going to charge a higher premium for this additional commitment.
- During the first year of COVID-19, many carriers put things on “auto-pilot” to keep workloads bearable for employees as well as to minimize stress on their clients. Now, they are playing catch up. This catch-up can certainly include rate increases as well as eligibility changes.
- Less skilled laborers in the marketplace can lead to increases in both the cost to build homes and the cost to repair vehicles. Less skilled labor also means the time to build/rebuild/repair takes longer, which means coverages [like additional living expense and rental reimbursement] are paying out higher amounts.
- Have you heard that 18-year-olds will soon be behind the wheel of 18-wheelers? If not, take a look at this article. Auto insurance is one of the least-profitable lines in the industry, and this move by the FMCSA could lead to auto insurance becoming even less profitable for auto insurance providers. This could cause more carriers to bow out of the market; any time competition constricts, price increases.
- On the topic of auto insurance, used cars are worth more. Just look at the used car market. In the event of a loss, insurance carriers are having to pay more to repair/replace these vehicles. These higher payments eventually return to the policyholders in the form of higher premiums.
- “Nuclear verdicts” is becoming a common phrase in the insurance world. This phrase has been coined to describe outrageously high lawsuits and settlements as a result of auto liability suits. Check out this nuclear verdict as an example. Carriers spending more on legal fees will also result in increased premiums moving forward.
At the end of the day, what should you expect in 2022?
You may not see a noticeable increase at all. You may see a standard increase of 5-10%. You may see a steep increase of 15%+. It is important to have an established trust with your agent and agency. With trust in your independent agent, you can count on them to place your insurance with the right carrier for the best value of coverage and costs. If you’d like to discuss these factors further, please reach out.
Jack joined the team in 2017 as an Account Executive, focusing both on personal and commercial lines. Jack is a native Chattanoogan, and graduated from Gordon Lee High School and the University of Georgia. He, his wife Alli, and son live in Chickamauga with their dog, George. Jack enjoys playing basketball, fishing, and a good cup of coffee.
Civic Involvement: Chaplain, Gordon Lee High School football team; Member, Shiloh Baptist Church.
Fun Fact: Jack is a lost soul in Northwest Georgia. Though he lives in Bulldog country, he actively supports the Tennessee Vols.