Historically, insurance rates fluctuated primarily based on your individual characteristics. Your specific home and cars, your insurance score, your claims and driving history. While that is all still true, we are seeing rates can fluctuate based on larger factors such as economic conditions, changes in risk profiles, regulatory changes, and trends in claims frequency and severity.

Here are some of the causes for fluctuations in insurance rates:

  1. Economic Conditions: During periods of economic instability, insurance rates may increase as insurers try to mitigate potential losses and maintain profitability. Most items in our economy cost more today than they did even 2 years ago. We see it from the gas pump to the grocery store.
  2. Claims Trends: If there’s a rise in the frequency or severity of claims in a particular area or industry, insurers may adjust rates accordingly to cover the increased risk. The National Highway Traffic Safety Administration shows in a 2023 study that fatal car crashes are up 15% over 2019. Bodywork repairs are up over 27% and used and new car prices are up over 21%. We are still seeing labor shortages in all industries from construction to auto technicians which make the claims more costly to settle, and cause you extra time.
  3. Natural Disasters: Events like hurricanes, earthquakes, or wildfires can cause significant damage and lead to higher insurance claims, prompting insurers to raise rates in affected areas. In 2023, there were 28 weather-related disasters across the US that exceeded $1B in losses.
  4. Technology and Data: Advancements in technology allow insurers to better assess risk and price policies accordingly. However, this can also lead to rate changes as insurers incorporate new data and analytics into their pricing models. Look up the cost to replace your bumper 5 years ago vs what it is today. The added safety features and cameras are wonderful technology, but costly to replace.
  5. Loss Experience: Insurers regularly evaluate their loss experience, which refers to the claims they’ve paid out compared to the premiums they’ve collected. If losses exceed expectations, insurers may raise rates to maintain profitability.

These are just a few of the larger items affecting your insurance rates. It’s more important than ever to be an informed consumer and seek to get the best value for your insurance dollars. Remember the lowest monthly premium could be a disaster for your budget in the time of a claim. When shopping for insurance find out important budget decisions, like how roof claims are settled, what your deductible will be for major claims, and what coverages might be excluded from your policy.