One of the promises we make to you as our customer is to keep you updated on market conditions that affect you, inform you of key trends that are shaping the insurance market for 2024, and explore strategies to navigate these uncharted waters. It is no secret the insurance industry is constantly changing. 2023 has ushered in a particularly turbulent period. The insurance industry hasn't experienced such a drastic change in over 20 years. If it hasn't affected you yet, it will. We must look closer at the latest trends and developments shaping the insurance market to help you better prepare for what is happening. Many factors, including a record number of natural disasters, economic fluctuations, regulatory shifts, and a dramatic increase in the cost of reinsurance for companies, have created a challenging landscape for insurers and policyholders alike.
A Hardening Insurance Market
Since the beginning of the pandemic, we have seen a steady increase in demand for insurance and a reduced supply. Eighteen months of consecutive quarterly increases have qualified us for a hard market. The last 9-12 months have seen the marketplace's fastest and most significant change. The term hardening indicates a tightening or increased strain on the insurance market. This type of market leads to several significant changes, such as:
- Increased premiums - Increase in frequency and severity of claims (think of all the natural disasters we have experienced in just the last 12 months), rising cost of repairs and replacements, increased construction costs, and change in how they assess risk. For these reasons, companies are taking significantly higher rate increases, more than we have experienced in several years.
- Reduced coverage options - Insurers are beginning to revise policy terms, exclude certain types of loss, or limit coverage for specific claims. Roofs are a hot topic with all the wind/hail recently. How these are covered is changing. Replacement cost is becoming difficult to get on a roof.
- Stricter Underwriting Criteria - Pre-approval/binding requirements, inspections, and documentation requirements have become the norm. Some carriers are no longer insuring certain risks, particularly those heavy in property. For example, habitational risks are challenging to place right now.
- Increased deductibles - We have seen this for years with State Farm and their % deductible on homes. Other carriers are starting to roll out % deductible for specific perils, particularly wind and hail. And the required minimum deductibles are increasing.
Unfortunately, we do not expect it to soften any time soon. Consumers can expect rates to continue to rise. The claims of 2023 have yet to be factored into company results. In Kentucky, the natural disasters and hailstorms over the past six months will cause changes to how carriers write business. Moreover, insurers may reduce coverage options or tighten underwriting requirements further, resulting in fewer consumer choices. We are already experiencing carriers no longer writing certain property types and increasing required deductible amounts. This can be particularly challenging for individuals and businesses with limited resources, as they may need help finding suitable coverage at a manageable cost. As an independent agent, Linville Insurance can give you unbiased advice and recommendations as a trusted insurance advisor.
Tips and tricks to help create your rate relief in an ever-changing market:
- Maintain a safe driving record
- Avoid small property/home claims
- Do a review of available discounts and see if you are missing any
- Consider protection devices such as alarm systems & water shutoff devices
- Look at Auto discounts like good student, away at school, low mileage, safe driving telematics
- Carry high auto liability limits
- Build longevity with your insurer
- Bundle your policies
- Consider higher deductibles
- Review coverage regularly with an independent agent
- Don't shop for your insurance every year; doing so can hurt you
- Don't let your policy be canceled; it may be challenging to get it reinstated or rewritten
The benefit of an independent agent.
With 50+ carriers, Linville Insurance represents the top financially secure carriers, so you do not have to do the research. As an independent agency, we work for you and present the top option(s) based on your needs. Services we offer:
- Unbiased advice tailored to your needs
- Access to multiple insurers
- Advocacy and claim assistance
- Customized coverage
- Ongoing support and policy reviews
- One-stop-shop
- Long term relationship
How do direct writers, like State Farm and Farm Bureau, differ from independent agents like Linville Insurance?
- Exclusive relationships vs. multiple carrier relationships
- Limited product selection vs. a wide range of products (business, farm, specialty, etc.)
- Brand loyalty vs. client loyalty
- Rigid guidelines vs. flexibility and advocacy-more options
Staying informed and agile will be vital to navigating the unpredictable waters as the market evolves. By understanding the importance of insurance coverage and making informed decisions, individuals, families, and businesses can protect themselves from the unexpected and ensure a stable future. Insurance is not a one-size-fits-all solution, so assessing your needs, exploring your options, and seeking guidance from trusted agencies like Linville Insurance is crucial. Our ability to work with multiple insurance carriers allows clients to compare policies and secure the best coverage at competitive rates. We are here to help. As always, we appreciate your business!