Insurance Premiums, Inflation, and College Football -How are they related?
It’s the best season of the year! No, I don’t mean hurricane season or fall, I mean college football season! The last few years have been good to be a Georgia Bulldog, and much to the dismay of our staff, we’re looking forward to another season of proudly wearing red and black on weekends.
The only thing that has hit harder than a SEC defensive lineman has been the effects of inflation on our wallets. Everything from food to our children’s allowances have felt the impact of inflation these last few years. Though the current administration states that this year’s inflation rate is only 2.5%, but when taking a broader look, the cumulative inflation rate since 2020 is well over 20%. It’s been downright painful.
When talking to a friend recently, she was lamenting how her car insurance rate (she’s with a highly advertised company) has increased by 20% just this last year. She figured that since inflation has been the cause of so many increases, this must be the case with her insurance as well. She would just bite the bullet and accept the new price. I advised to pause on paying for this outrageous car insurance premium and look around for more options.
Just like college football teams experience higher rates of success or failure with incoming or outgoing leadership, insurance companies are not all experiencing the same rate of change due to inflation. Inflation is one of the causes of increases, but there are a few other factors that come into play that is putting some lesser-known companies on the board. Don’t be afraid to have some competition when it comes to rate shopping. There are dozens of companies that can quote your auto, home, or business insurance.
Even across the different lines of insurance there are wildly different rate increases and recently decreases! Home and commercial property have changed the most with rates sometimes increasing 30% in one year. Auto insurance has seen an increase of around 25% over the last few years but has stabilized this year with many companies that were forward thinking with their risk mitigation. Business insurance has been stable, with Workers Comp decreasing their rates on average of 12% across the different industries. So, if inflation is the only factor in these rate changes, why is there such a wide variation?
There are a few other factors that go into premium that have affected rates recently:
- Increased litigation fees for claims (this will soon be remedied by 2024 legislation)
- Increased storm traffic and strength
- Increased cost the rebuild (not in terms of inflation but in terms of amenities and luxury)
Every insurance company has experienced inflation, but not all companies have these three factors. In the past, only those large, heavily advertised companies have been competitive with rates. But recently, the underdog companies have been coming out on top in terms of better pricing.
It’s anybody’s game when it comes to insurance prices, the rate changes aren’t all due from inflation. So don’t settle for the quote you’re given if it’s increased by 30%. Call around to an insurance agency (like us) that has a wide variation in insurance companies. Like insurance rates, I’m hoping to see some underdog teams rise. It keeps the competition fresh, the game exciting, and hopefully in terms of insurance, your premium lower.