Insurance Rates Going Up?

Why are my rates increasing? It’s what everyone is asking, it’s what everyone is Googling. Hastings wants to have a very transparent conversation about what’s happening.

Insurance rates are incredibly complicated. At Hastings, we believe you have the right to know more about rate changes, especially increases.

We all pay insurance premiums and we all feel that frustration when they increase. Even those of us in the industry feel that pain.

While that is all well and good, why do premiums fluctuate so much, then? Several factors impact premiums, and many of them are out of the insurance carriers' control. We'll talk about what some of those impacts are, in this blog.

One thing to note is that insurance carriers submit their rates, and rate changes, to the state where they offer service. Each state reviews the rates, any applicable increases or decreases, and so much more. This ensures that carriers are charging fair and equitable rates, and provides protection to the consumers.

So, what are some of the top reasons for the most recent rate increases:

• Supply and demand changes
• Inflation
• Severe weather

We are seeing some of the largest impacts of the COVID-19 pandemic. Namely, supply chain disruptions, manufacturing delays, and inflation, which caused insurance costs to increase.

These increases focus specifically on restoration costs - either to fixing home damages or auto damages. It’s not just insurance premiums, either! Consumers are seeing these rate increases on groceries, building materials, our beloved avocados, and everything in between.

This still doesn't answer the question of why this impacts rates.

As it gets harder to move goods from point A to point B, the demand increases. With decreased supply, consumers and carriers are paying more for everything. We see this, in insurance claims, with car parts, building supplies, and even labor.

Used cars are more expensive, seeing an approximately 40% increase. This means repair parts are more expensive, and claims are more expensive. New vehicles, due to slowed supply chain and manufacturing delays, were up 20% in cost, in 2021. These are costs that are unavoidable, and insurance carriers pay to make their customers whole again, after a loss.

Currently, inflation is at a several-decade high, at 7.1%.  This is DOUBLE what the United States usually sees, and impacts every day items for all of us.

Insurance premiums are an unfortunate casualty to this as well. As inflation rises, so do basic operating costs for all businesses, causing a trickle down effect. When it costs body shops more money to have parts delivered, they pass those costs onto insurance carriers. When they struggle to find laborers, labor costs increase.

Altogether, these increases create costs that are exponentially higher than prior years.

The third reason for increased rates – weather. In 2021, the U.S. saw the highest number of weather-related losses in the last decade! However, the virulency of the storms the last couple of years have caused intense damages, which means increased claims payments.

With all of these factors impacting premiums, the benefits of insurance can be hard to see.

While insurance rates may be rising, any claim for your business, vehicle, home, or farm can quickly far exceed insurance premiums. Insurance policies are there to help shoulder the financial burden of restoring you to your pre-loss condition. We all hope to not have to file a claim. However, the financial relief from a claim payment can make all the difference.
You do have control of your carrier, and picking the right one for you. All carriers are providing a service, so make sure you do your research on the best one for your needs. Choose a carrier that is looking out for it's Insureds.

Hastings, for example, specifically developed a geo-spatial tool for weather claims, to help premium planning. We can't control the weather, but we absolutely want to do everything we can to help our clients. You can read more about our award-winning tool, and how we are working to reduce claim costs, at CIO’s website.

Additionally, Hastings Insurance Company is a Mutual company. That means our Insureds mutually own the company. We don't have stakeholders to answer to - our Insureds are our first responsibility.

We also work with Independent Agents, who know our business inside out. They know what coverages are best for your needs, and will match you with a policy that works for YOU.

When it comes to your coverage, you have a voice. Here are a couple of ways to keep rates lower:

• Make sure your Agent knows about any protective devices, in your home, for any discounts.
• Bundle your policies, to maximize discounts.
• Use accredited and experienced body shops and builders, if you have a claim. Their knowledge and experience can often help keep costs down, without sacrificing quality.

Need a quick recap? Check out our video with all this and more!