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Effects of Inflation on Insurance Industry

Inflation on Insurance Industry : Inflation is killing the American Dream. It’s causing prices to go up in every aspect of your life – food, gas, cars, clothes, electric bills, hotels, airline tickets – and on and on. Inflation has robbed people of their savings, forced them to rack up huge credit card bills and now over 65% of American households are living paycheck to paycheck.

Did you know inflation also impacts your insurance? True. Often overlooked, inflation is causing your insurance premiums to skyrocket.

Health

Although healthcare has been a source of inflation relief over the last year, it will not last, according to news website Axios. In fact, health care might be the next driver of inflation.

The Department of Labor’s Bureau of Labor Statistics (BLS) will update its methodology for calculating health insurance starting in October. Economists expect that will mean health insurance goes from falling 4% per month to rising 1% a month.

Americans now spend over $13,000 on healthcare every year. High insurance premiums and deductibles are just some of the costs that come with maintaining your health, and those costs are going to get higher.

Homes

Inflation has made buying a new home for the average American virtually impossible. But it’s not just the price of the house or condo, or high mortgage rates, it’s the cost of home insurance.

CNN Business reports that homeowners insurance is more expensive than ever before and, in many places, more difficult to find.

From natural disasters like hurricanes, tornados, and wildfires to rising costs for rebuilding and repairs, plus a sharp increase in the premiums from reinsurance companies – the price of homeowner insurance has gone through the roof.

Major insurance companies have already pulled out of Florida, leaving homeowners paying premiums nearly four times higher than those paid in other states. Hurricane risk is a big part of Florida’s problem – Hurricane Ian last year was the most expensive storm to ever hit the state.

Two of the nation’s largest insurers, State Farm and Allstate, don’t even write new homeowners policies in California anymore, partly because of the increased risk of wildfires.

Cars

Car insurance prices were up 19.1% in August 2023 compared to a year ago. It is rising at the fastest pace in 40 years. According to the BLS, auto insurance prices are soaring because insurers raise premiums to keep up with their own rising costs.

First, the rising MSRP of a new car or truck means the insurance for those cars and trucks also rise. New vehicles are more technologically advanced now and more advanced cars mean more expensive car repairs. Vehicle repair costs were up almost 20% this May compared to the previous year, according to the Consumer Price Index (CPI.)

While car insurance hasn’t been a large line item on a household budget before, it’s taking out a bigger bite now.

Reinsurance

Finally, the cost of reinsurance is going up. Reinsurance is defined as insurance that an insurance company buys from another insurance company to insulate itself from the risk of a major claims event.

“Home insurance and auto insurance are regulated,” Douglas Heller, Director at the Consumer Federation of America, says, “But the reinsurance industry isn’t. This leads to wide pricing variation among insurers and by state, and that change in price is passed along to policyholders.”

Inflationary pressures are making life miserable for Americans, and Washington’s spending addiction is making it worse. But there is some good news. The insurance marketing business is one place where inflation hasn’t hit (yet)– and that’s a big relief if you’re a salesperson.

At one company, prices have actually gone down. So, if you’re a marketer, and looking for an affordable, up to date email list for insurance agents and insurance brokers, contact the Email List Company by clicking here.