In 2023, the insurance industry experienced a “hard market” on property insurance that impacted coverages and rates for many. What does this mean?
A hard market is when insurance companies raise their rates and begin to be more restrictive on what and where they will insure. This typically occurs when there are large losses that have impacted claims for these companies. That was the case at the end of 2022 and throughout 2023.
Catastrophic events are often the driver for this in the property market. Wildfires, hurricanes, tornadoes, hail, and more can bring large losses and frequently in concentrated geographic areas. In the auto insurance market, higher cost for parts, slower repair completion, more expensive replacements for electronics (e.g., hybrids, EV, microchips, etc.) have resulted in a similar increase in rates. Many companies have also reduced their offerings in the market as well.
When insurance companies pay out these larger claims, their profitability takes a hit.
In fact, the property and casualty insurance industry as a whole experienced unprofitable years in 2022 and 2023.1
While some project a return to industry profitability sometime this year, the impacts are still taking place. Companies are charging more to insure property, whether it is a home, business building, or otherwise. Why should you care if insurance companies make money? Certainly, these are large corporations, some of which are worth billions. But they still support millions (almost 3 million in 20222) of people and provide safeguards for almost every individual and business in this country.
In 2024, it is likely that rates will continue to climb, but possibly at a slower rate. Then we anticipate that things may begin to “soften” as the year progresses.
So, for now, with higher rates and the potential for less options, what can you do as a consumer?
Plummer Insurance is an independent agency that has contracts with many different insurance companies. We can give you options, whether it is for different coverage or different pricing. Many other agents work directly for one carrier and cannot offer you other choices.
Our agents can discuss your options and help you find the coverage that’s best for you. Give us a call and let’s discuss it!