Well, hold on to your hats because here we go! 2023 set a record for the largest number of Billion-dollar catastrophes in history (and it’s not over)! In the past three years alone, the world has experienced a pandemic, violent political unrest, severe supply chain issues, global conflict, high inflation, and multiple historically extreme weather events. All of which impact the growth and profitability for insurance companies.
For a little background, insurance companies’ rates are always one to two years behind what’s happening in our economy. So, after COVID, with the supply chain issues it caused and the extreme increases in the cost of cars, parts, labor, construction and materials, we were paying our insurance rates for the years previous while insurance companies were paying out the higher costs for all of the above. Now insurance companies are paying out claims faster than they can get the premiums to offset those claims and trying to make up for those losses with rate increase over 40%. In Minnesota, our department of Commerce is making that difficult by not allowing the necessary increases. Insurance companies are required to submit for approval to the Department of Commerce any projected rate increases and must justify those increases to our insurance commissioner. Well, our insurance commissioner is extremely consumer focused and is not allowing those increases the insurance companies need to stay solvent. This is forcing the insurance companies to try other methods to try and stem their losses. In Minnesota, this includes companies no longer accepting new customers, excluding coverages for any damage to soft metals including siding, increasing their hail deductibles to a minimum of $2500 and not accepting new clients if their roof is more than 10 years old!
My point to all of this is to expect some dramatic changes to our insurance policies and rates in the forthcoming year.
What can you do about this you ask? Good question! Here are a couple of ideas.
- Consider increasing your deductibles to $1000 on your vehicles and $2500 on the home.
- Consider reducing older vehicles to liability only.
- Be careful when deciding to file a claim. If there isn’t substantial damage, don’t file! If you have a question as to whether you should file aclaim or not, call us and let’s discuss it.
- Be careful on the road! It’s illegal to use your cell phone in any manner with your hands. Don’t do it! If someone else wants to be stupid, let them, and give them space.
- Slow down, you’ll get to where you’re going and you have a better chance to get there in one piece!