Rising Insurance Rates (Part 1 of 3)

You're not alone if you're wondering why your insurance rates are rising. Many people are noticing an increase in their premiums and are curious about the reasons behind this trend. Let's explore the key factors behind the increase in insurance costs and discover tips on managing your expenses more effectively.

Factors Contributing to Rising Insurance Rates

Understanding the factors contributing to increasing insurance rates can help you make informed decisions about your coverage and potentially find ways to save money. These factors contribute to what is known as a "hard market" in the insurance industry. In a hard market, insurers increase rates to match the escalating expenses and have become more selective about the clients and risks they are willing to insure. This type of market can make it more challenging for individuals and businesses to find affordable coverage. Here are some recent trends affecting all insurance companies:

• Inflation - The cost of automotive parts, construction materials, and labor have risen notably due to inflation. As the cost of raw materials and wages rises, so does the cost of repairing or replacing damaged property. This translates into higher claims costs for insurance companies, which are then passed on to policyholders through increased premiums.

• Increased Frequency & Severity of Car Accidents - Factors such as distracted driving, increased traffic, and higher speeds have contributed to more frequent and severe collisions. These accidents lead to more substantial vehicle repair costs and higher medical expenses for injuries, which drives up auto insurance premiums.

• Judgments for Personal Injuries - A recent study found the median award in motor vehicle injury cases is $15,000 and the median award in liability cases is $90,000. While only 5% of personal injury cases go to trial, the other 95% of civil cases reach settlements, and personal injury settlements aren't usually as high as some verdicts. However, liability cases have larger jury awards and settlements. This means insurers face higher payouts, causing premiums to rise in offset.

• Increased Frequency and Severity of Weather Events - Climate-related events, including hurricanes, floods, wildfires, and tornadoes, have become more frequent and severe. These natural disasters cause extensive property damage and lead to a surge in insurance claims. As a result, insurance companies are forced to raise rates to cover these increased risks and potential losses.

• Increasing Healthcare Expenses - Healthcare costs have consistently increased, impacting health, auto, and homeowners' insurance. When policyholders are injured, whether in a car accident or on someone's property, the cost to treat those injuries has surged. Insurance companies must adjust premiums to keep up with these rising expenses.

How First Mid Insurance Group Can Help

Our insurance agents are experts in navigating the complexities of the insurance market. Let us assist you with:

Reviewing your current policies to ensure they meet your needs

• Advising whether switching carriers could save you money
• Suggesting adjustments to your deductibles, insurance coverages, or premiums to optimize your coverage and costs
• Bundling your policies to help save on costs
• Implementing risk management plans

As an insurance broker, we work with many insurance companies. We can provide all the coverage you need to protect your personal life and/or business.

Need help navigating the ever-changing insurance market? Contact us today and let us find you the best insurance solutions for these challenging times. We're here to support you every step of the way.

Sources:

• Forbes
• On The Map Marketing
• Experian

Insurance products are offered through First Mid Insurance Group. First Mid Insurance Group, Inc. is a wholly-owned subsidiary of First Mid Bancshares, Inc. and an affiliate of First Mid Bank & Trust, N.A. Insurance services are not deposits or obligations of the bank, are not insured by the FDIC or any governmental agency, and are not guaranteed.

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