The recent economic landscape has been particularly challenging for insurance companies and their customers. So, as insurance carriers adjust rates and coverages to keep pace with inflation and environmental conditions, many people have questions about the resulting changes to their insurance policies.
What’s driving these changes?
- Underwriting challenges: Economic pressures require insurance carriers to accurately examine and assess risk to maintain competitive rates for everyone. Good economic conditions over the last decade provided tremendous rate stability. However, things have changed, and the industry is experiencing a perfect storm of financial and environmental conditions necessitating above-normal rate adjustments. Many carriers are making staged adjustments to make the transition for policyholders easier.
- Inflationary conditions: Inflation continues to heavily influence the insurance industry because of continued parts and labor shortages. Everything costs more, and without adequate coverage allowances, policyholders could find themselves paying higher than expected out-of-pocket costs.
- Rising cost of claims: Over the past decade, the industry has seen increased frequency and severity of property insurance claims. Extreme weather events, natural disasters, and a sharp rise in property values drive higher costs to settle claims, sometimes necessitating alterations to coverage terms.
While these changes may be challenging for customers, working with their insurance agent is a great place to start. Agents can often adjust coverages, take advantage of available discounts, or establish payment plans to make these adjustments as manageable as possible.