Skip to main content

Insurance Rates on the rise…why?

By April 2, 2024April 4th, 2024No Comments

We are in unprecedented times. We at Mansfield insurance agency think it’s time for unprecedented communication. This is going to be a long one, forgive me for that. However, I do think it will help to explain some of the things we are all dealing with in the last three years. We continue to see raising premiums (especially this year in home policies). The insurance industry has continued to have to adjust to unforeseen factors affecting their financial stability. The three main factors are hyperinflation, claims frequency, and severe weather patterns. I want to address the first one, hyperinflation,  in this editorial.

We are receiving information from our eight different insurance carriers it seems monthly. Many are changing their rates to adjust to what is happening. Some have gone further and adjusted how their policies are organized. Increasing minimum deductibles, changing new business eligibility, and in some cases how they are responding to wind/hail claims are all steps we are navigating. These increases and policy changes are not carrier specific. They are industry wide. I don’t know of a carrier that has not increased their premiums significantly in 2023. Most (if not all) plan to make similar increases again in 2024.

This insurance market is the most volatile in our agency history. In this editoriall I’m going to address hyperinflation. I will plan to write a series of pieces that address each of the major factors affecting the insurance industry.


Hyperinflation and Insurance

Insurance rates are designed by insurance companies based on what they think it will cost to make the policyholder whole at time of loss. This includes things like roof damage during a windstorm, cleanup after a water or fire loss, repairs to a home or auto, or replacing a vehicle after an accident. These repairs or replacements have increased dramatically. The overall cost to maintain and repair a vehicle is up 19.5% according to the Consumer Price Index. Replacing a vehicle has not been any better. The average price of a new car has risen 20%, while used cars have gone up an astounding 37%.


Building materials are a similar story. In 2022 building materials were up 4.7%, another increase that followed a 14.7% increase in 2021. These increases have all led to higher costs per claim for insurance carriers.


The numbers above are countrywide. To give you a more local look at these factors I’m offering a look at our agency numbers. In our agency alone we saw our cost per claim rise 35% this past year. Going from $7500 per claim to $10,100 per claim. The graphic below shows claims numbers from our system between 2020 – 2023. It’s a good illustration of the increases we have seen in just our communities.

View Claims Chart Here

I show you these numbers to illustrate that not only are we seeing factors throughout the country, but we are seeing them in our local communities as well. Again, we are in unprecedented times. We at Mansfield Insurance Agency want to be transparent about the issues our industry is facing. 


What can you do about it?

1. Maximize your discounts. The largest discounts insurance carriers offer is multi-policy discounts. The more policies you have with a carrier the more your discount. There are also other discounts that could be available in certain situations.
2. Credit. Most insurance carriers use a client’s credit a factor in your insurance premiums. They do this because statistically an individual with a lower credit score tends to have a higher loss ratio. Taking steps to improve your credit score can help lower your insurance premiums at renewal.
3. Roof Year. The age of your roof has become a very important factor in both coverage and rating. Some of you may have heard from us. We are reaching out to everyone to make sure we have the age of the roof correct. If you have updated your roof please contact us so we can make sure your roof age is correct on the policy and in our system.
4. Pay in Full. Many carriers provide discounts on annual premiums if they are paid in full.
5. Review Vehicle Usage. Again another rating factor that many don’t think about is their annual mileage and usage of their vehicle. Rate is based on risk. If you have vehicles that are not driven much annually or your commute has changed dramatically it may be beneficial to update the usage with your agent.
6. Modify Deductibles. Many remember having a $250 Homeowners Deductible. Those days are sadly over. However, your auto deductibles and homeowners deductibles is a lever you can use to lower premiums. Have a discussion with your agent on what changing your deductibles can do for your premiums.
7. Telematics. Many carriers provide programs that include technology that will track driving habits. This technology will provide drivers with specialized rating based on the driving data collected. Things like hard braking, fast acceleration, distracted driving (phone use while driving), speeding, time of day you drive, etc. are all measured. Discounts and added benefits are provided to those who achieve good driving scores.
8. Ask for us (or your agent/agency) to quote other carriers. The benefit of working with an agency like ours is you can get a view of the market in one place. As an independent agent we can provide an insurance policy from several different carriers ensuring you are receiving the best coverage at the best price. This option has changed drastically in the last few months as many carriers are adjusting their eligibility guidelines to limit new policies. Our staff will evaluate your specific situation and provide a market analysis showing what each of our carriers can provide.
9. Mitigate Losses. We are all in this together. The better we all maintenance our homes and pay better attention while driving the better all our insurance rates will become. Most claims are sudden and accidental but there are things you can do to try and lessen claim events. Trimming Trees that overhang the home or commercial property, cleaning out gutters, cleaning out your chimney flue annually, and check sump pump operation are all things that can help keep a claim from happening to your home.


In the next edition of The Beacon I will cover part two of this series: claims frequency. We will plan to continue to monitor all of our carriers and their unique decisions over the course of 2024. Ultimately, we want what is best for our clients. If you have any questions, please reach out to me or one of our agents at 812.637.2300.


We value our relationship with all of our clients and don’t take advantage of the trust put in us to be an advisor.