Why Are Home And Auto Insurance Rates In New York Rising So Much In 2023 | Herald Community Newspapers [Boss Insurance]

Why Are Home And Auto Insurance Rates In New York Rising So Much In 2023 |  Herald Community Newspapers

david arkin

Even though inflation has come down nationally, its effects are likely to linger for some time.

While the country could see inflation continue to fall by the end of the year, economists say it could be a while before we see relief in our wallets.

Take a look at what’s happening with home and auto insurance rates this year. Policyholders across the country — and, especially in states with a higher cost of living, such as New York, New Jersey, and California – see significant increases for their home and auto insurance through at least 2023, if not longer.

The reason? Inflation; specifically, higher inflation in certain economic segments that determine insurance rates.

How we got here

Alex Anderson, owner of Anderson Agency in Rockville Center, said in late 2022 and into 2023, industry-wide, insurance companies that issue home and auto insurance began filing steep rate increases and implemented underwriting restrictions more stringent.

While there are a multitude of factors that come into play, the industry is essentially seeing higher claim payouts for historically similar incidents. This is something that the current auto and home insurance rate increases have in common. Anderson believes that the persistence of this segmented inflation is at the heart of the increase in insurance prices.

Looking back, one of the first signs that inflation problems were on the horizon for insurance companies came when the auto market and the construction industry began to struggle. supply chain, Anderson said. Insurance companies generally did not begin to feel the brunt of this immediately. The reason for this is that home and auto insurance companies don’t start making higher claims payments until the time actually passes, and they actually start paying their policyholders’ claims.

With home and auto insurance, these increased construction costs, including labor, played a role in these premium costs, as Anderson noted that material and labor costs per compared to those before 2020 appear to be “significantly higher”. Anderson also said that coastal exposure on Long Island, coupled with higher claim payouts, has driven up the costs of insurance companies’ own insurance, known as reinsurance.

How insurance companies are tackling the problem

Anderson, who has been in the industry for a decade and has his office in Rockville Center, said there are really two main levers insurance companies can use when they themselves are faced with higher costs. high and lower profits: tighten underwriting and raise tariffs.

Subscription: It is the process followed by an insurance company to decide whether someone should be offered a policy by weighing past claims, credit profiles, driving records (car insurance) and other associated risks to the potential customer. Because insurance companies have to recover from inflation, Anderson said he expects carriers to be much more selective than they have been in the past when it comes to to issue new policies.

Rate increases: Insurance companies in New York are regulated by the State Department of Financial Services. They approve of rate increases, but they also won’t let insurance companies bear too much of the rate cut. Each company has its individually state-approved rates, Anderson said.

But overall, home insurance as well as personal insurance, such as auto, are the hardest hit by rate increases, Anderson said.

From 2022 to 2023, car insurance rates have increased by 14% across the country, with the national average cost of full coverage for a car being $2,014. In New York, that average is $3,139, according to Bankrate.

A study of Policygenius showed that New York hSome insurance premiums have increased by 8% from 2021 to 2022, so through these two data points we can see where this trend is heading.

There’s a benefit to having someone you can get direct advice from during times of uncertainty, Anderson said.“When someone gives me their business, it means a lot to me personally,” he said. “People have options in life, and who you use for insurance is one of those choices, so when someone decides to do business with you, you really come to appreciate them. “As an insurance agent, your clients provide a window into their lives. And in those discussions, as an agent, you become incredibly close to the details of your clients’ lives. That trust matters to me.”

Want to learn more about ways to save money on your insurance? You can contact Alex Anderson here.

Coming in May

The LI Herald will discuss with Anderson all the ways you can save money on your car insurance and how he approaches the process with current and potential customers.