If you notice your insurance rates increasing in your state, don’t fret, insurance rates have increased in 10 states, so you are not alone. According to Policygenius, those states are:
o Arkansas
o Washington
o Colorado
o Texas
o Oregon
o Arizona
o Utah
o Minnesota
o North Carolina
o Illinois
If you’re worried, the best thing you can do, is to understand the market, and why this is happening. With Woop, we offer you all the information on the industry to empower consumers with knowledge, and simple, convenient price transparency quoting to offer you the optimal in insurance rates and coverage. So, read on to get more information, and then use our app to find the best coverage for you.
To start, it’s important to understand that there are a couple reasons as to why insurance rates have increased in your state.
The COVID-19 Pandemic
The COVID-19 pandemic changed many of our normal habits and caused many economic challenges - especially in the building and auto industries. During the pandemic lockdowns, people started driving less than normal. Insurance companies even refunded premiums to some policy holders. However, in 2022, driving habits resumed back to normalcy. People are back on the roads commuting. Traffic patterns are resuming, and insurance companies must rebuild their claim reserves, which can result in higher premiums. This is because the company must pay for their losses.
Inflation
Inflation is the rate of increase in prices over a given period. When inflation occurs, domestic currency is losing value. From June of 2021 to June of 2022, the Consumer Price Index (CPI) rose by 9.1 percent. In short, we spend 9.1% more on the same services and goods than we did a year ago. Insurance is designed to help pay for costs after an accident, so when prices go up, so do insurance rates. For example, nationally, car insurance rates are increasing by an average of 4.95%, according to approved rate filing data from S&P Global Market. There are higher prices to replace parts, or even your entire vehicle, which is driving the insurance rates up in your state.
Supply Chain Disruptions
Due to the COVID-19 shutdown in 2020, the demand for supplies in certain industries increased. However, the supply is still low, and cannot meet the demand.
To make it short and sweet:
Low supply + high demand = expensive prices.
This is the exact same in the insurance industry!
Labor Shortages
According to the HBI Construction Labor Report, the construction industry is currently down 200,000 skilled workers. That means the cost of skilled labor is more expensive. As are construction materials. This goes for auto repair as well. Many auto repair shops have low staff availability, making labor costs higher.
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