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What’s Driving Auto Rates?

Auto insurers dealing with the “pandemic price”

Across seemingly every news outlet, it’s hard to escape reports of inflation and rising consumer prices.

And, like other goods and services across the economy, auto insurance rates are a part of the conversation. Currently, many carriers are raising prices to account for unexpected costs—but what’s driving those decisions?

You guessed it. It’s primarily pandemic related, but perhaps not in the ways you might think. As you have conversations with your clients about rising auto insurance costs, the following may help you better explain what’s driving rates to help them better understand the situation.

A return to “normal”

Of course, we’re hardly back to “normal” as the world continues to wrestle with the pandemic, but driving behavior, particularly vehicle miles traveled, has essentially “normalized” and returned to pre-pandemic levels.

At the outset of the pandemic, miles driven dropped, claims fell, and insurers issued refunds/credits, lowered rates, or both. As 2021 unfolded, driving behavior picked up as did claims frequency and, in turn, insurers’ costs.Most auto insurers subsequently found themselves underpriced.

Rising repair and replacement costs

For insurers the past predicts the future. Generally speaking, insurers review historical data and trends to set prices for future expected costs. The pandemic, however, upended expected repair and replacement costs in ways that were challenging to anticipate. Case in point: unpredictable pandemic-related supply chain disruptions and labor shortages have driven claims costs up substantially.2

In fact, the Bureau of Labor Statistics reports that average expenditures for vehicle repairs have risen more than 4% over the last year, while used car and truck prices have skyrocketed by more than 40% over the same period.3

When you combine the uptick in vehicle miles driven and the related increase in claims with rising costs to cover those claims, carriers are paying a “pandemic price” that will affect rates throughout the auto insurance industry in the near term.

How agents can help

Knowledge is power, and while rate increases can be difficult for consumers to accept, as their trusted, expert adviser, you can provide valuable information and context to help your clients understand what’s driving these rate changes.

Consumers choose independent agents for their knowledge and guidance, and in challenging times like these, agents can help clear up confusion, provide expert counsel, and deliver the peace of mind consumers crave in uncertain times.

  1. U.S. Federal Highway Administration, Vehicle Miles Traveled, Monthly Report: June 2021.
  2. Insurance Information Institute, “Auto Insurance Rates Impacted By Labor Crunch, Supply Chain Disruptions,” June 2021.
  3. U.S. Bureau of Labor Statistics, Consumer Price Index, Table 2: July 2021.
  4. Manheim, Used Vehicle Value Index: June 2021.

Article written by: Keith J. Mita, CIC CPCU AICProgressive Insurance Sr. Sales Representative – Personal Lines

Hurricane Preparedness Tips

Hurricane Preparedness Tips
Living near the coast can be a little nerve wrecking during hurricane season. Being prepared is a wonderful way to help decrease panic and ensure life gets back to normal as soon as possible after the storm. Here are a few tips to consider:

Take a Home Inventory
Taking a home inventory ahead of a hurricane is important. Take inventory of everything inside your home—clothing, toys, furniture, kitchen items, electronics, household goods, etc. You especially want to have proof of high value items. A walking video through your home is an easy way to record your property and make the process of getting paid for your damaged items much easier. Save this video online or in the cloud so it can be accessed even if your electronic devices are damaged in the storm.

Have an Emergency Supply Kit
Having an emergency supply kit on hand is important. Not only can these items make dealing with the post-hurricane mess a little more bearable, they can also ensure the safety of your family.
Include items in your kit such as:
• Non-perishable food
• Bottled water
• Batteries
• A battery powered cell phone charger
• Flashlight
• A first aid kit or other medical supplies

Also, consider keeping items of importance with you. This can include bank information, birth certificates, important family photos, etc. If certain members of your family require daily medication, be sure to keep a few days’ supply with you. Find your home insurance policy number and your company’s claims phone number to include in your packet of important documents. 925 Partners sends all our clients an email as the storm is approaching with their home insurance policy number and a link to their company’s phone number to file a claim immediately after the storm.

Secure Your Property & Prepare
Preparing for a hurricane takes a bit of effort. However, there is usually a bit of advanced warning for this type of storm, which allows you to appropriately prepare your home. Identify potential hazards—such as windows that need covering—and make appropriate plans to secure them. Fill your car tank with gas and be ready for any emergency evacuation orders. It is also vital to communicate with your family what your emergency plans are and how to communicate with each other if you are separated during the storm.

After the Storm
• If
your property sustains damage, contact your agent to file a claim as soon as you have the chance. In a catastrophic situation, thousands of claims will be filed, and the sooner you file your claim, the sooner it can be resolved.
• As soon as it is safe to do so, take photos of the damage.
• Take any measures necessary, while maintaining personal safety, to secure your property from more damage. Hiring someone to tarp your roof, remove mold, clear debris, etc., will all be covered by your home insurance policy. Keep all receipts and take photos of the work you have done before your claim adjuster can make it to your property.

The team at 925 Partners takes a proactive approach to guiding our clients through the hurricane process. From in-depth guidance when selecting a home insurance policy with the proper coverages and deductibles, to sending correspondence prior to the storm’s arrival to check one more item off your hurricane preparedness list, to assisting with the claim process to get you back on your feet, 925 is prepared to serve the Jacksonville community through the 2021 hurricane season.

Home insurance rates in Florida are on the rise…We can help.

Written by: Austin Williams, Vice President – Personal Division

I wanted to give an update on the Florida insurance market. As I am sure most of you are aware if you have shopped your homeowner’s insurance policy recently or received your renewal for your current homeowner’s policy, rates in Florida are going up and carriers are getting stricter on the business they write.

According to an article posted in the Insurance Journal this past October, unchecked claims litigation from non-catastrophe water losses is on the rise and a major cause for rising rates. There has been little help from Florida legislation regarding this issue. Year over year, there has been a significant increase in claims that go to litigation which has furthered losses these carriers are seeing. Barry Gilway, president and CEO of Florida’s Citizens Property Insurance Corp., said “litigation for the state-run insurer of last resort has increased in some parts of Florida by 500% in the last four years.”

All of this has caused a volatile Florida insurance market. The reinsurers (a company that provides financial protection to insurance companies) for the Florida carriers have responded to these large losses by increasing renewal rates for the carriers by an average of 25%-30% – the largest increase in 15 years. These reinsurance costs are the largest expense for some carriers and often dictate a company’s underwriting guidelines, how much business they can take on, coverage reductions, etc.

What does this mean for the Florida homeowner? Lack of availability, reduced coverage, increased premiums, and stricter guidelines, particularly for your roof and the plumbing of your home. To curb claims and continue to be profitable, carriers are taking drastic measures to offset these large losses, such as no longer accepting homes built before 2010, only accepting a roof that is 10 years or newer, and limiting or even excluding water damage on older homes.

This is affecting all carriers that write in the state of Florida, but not all carriers are equal in their rate increase and what they require. Some carriers are only taking a 5% increase, while others are increasing upward of 50%. While some carriers are limiting their roof age, others are still accepting shingle roofs with no age limit, assuming they are still in good condition.

The market in Florida is getting tough, there is no doubt. That is why it is more important now than ever to find an independent insurance agent that will take the time to help you find the best coverage for your home and an annual premium you are comfortable with. Our agency, 925 Partners, will take the time to make sure you have exactly what you need.

Please give me a call at 904.906.6162 or call our main office line at 855.925.1200 or visit our website for more information: www.925partners.com

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