The rising insurance rates over the last 10 months or year can be caused by a number of factors, including:
- Increased frequency and severity of claims: The number of insurance claims has been increasing in recent years, and the average cost of claims has also been rising. This is due to a number of factors, including more severe weather events, increased traffic congestion, and more complex medical procedures.
- Increased fraud: Insurance fraud is a major problem, and it is estimated to cost the industry billions of dollars each year. Insurance companies must pass on the cost of fraud to their customers, which drives up rates.
- Low investment returns: Insurance companies invest their premiums in order to generate income. However, investment returns have been low in recent years, which has forced insurance companies to raise rates in order to maintain profitability.
According to a recent study by the Insurance Information Institute, the average cost of auto insurance increased by 3.1% in 2022. This is the largest increase in auto insurance rates since 2015.
The study also found that the average cost of homeowners insurance increased by 1.4% in 2022. This is the first increase in homeowners insurance rates since 2018.
The rising cost of insurance is a major concern for many consumers. There are a number of things that consumers can do to reduce their insurance costs, such as shopping around for different policies, increasing their deductibles, and taking advantage of discounts. One should be aware however that simply lowering the amount of coverage or types of coverage may not be in someone’s best interest. The amount of money saved by not carrying underinsured and uninsured motorist coverage may not be significant when faced with injuries from a driver who has no insurance or is carrying very little.
-Rick D Wagner