We are asked all the time, “why are my insurance rates increasing when I haven’t had any claims. First of all insurance is based on the law of large numbers, which means the cost of insurance and claims are spread over the entirety of policyholders and who has a significant savings to self-insure. Second, inflation affects insurance rates as our research notes.

Inflation can impact insurance rates in a number of ways. When the cost of goods and services goes up, so too does the cost of protecting customers[1]. Insurance companies look at a variety of factors including industry trends like the number of claims and costs to repair vehicles and homes when determining insurance premiums[1]. In some cases, insurers will increase rates because of something within the policyholder’s control, such as a roof that needs to be replaced or a recent claim[2]. According to a study by JD Power, the dramatic increase in the cost of insurance in the past year, driven by inflation, is impacting customer loyalty, with an 11.8% rise in insurance quote rates and 3.6% of consumers switching insurance companies from Q1 to Q2[3].

These factors have an affect on all insurance clients, but with us, an independent insurance agent, we shop are stable of carriers to find the best coverage at the best price giving our clients a hedge against insurance rate increases and inflation.

Sources:
1. https://www.progressive.com/resources/insights/insurance-rates/
2. https://www.policygenius.com/homeowners-insurance/why-did-my-homeowners-insurance-rates-go-up/
3. https://www.dig-in.com/list/6-ways-inflation-is-impacting-the-insurance-industry