The auto and home insurance markets are facing numerous challenges resulting in sharp increases on auto and home insurance premiums. On average, auto rates in Wisconsin were up over 30% in 2023, the largest annual increase in almost 50 years. Home insurance rates in Wisconsin were up 15% and some states are up over 60%.
The primary factors driving this disruptive market include:
- Weather-related catastrophes. Through the first 10 months of 2023, there were 24 weather events with an industry payout of over $1 billion. Between 2018 – 2022, the average number of annual catastrophic weather events was 18. Over the prior 20 years, the average was only 1 per year.
- Cost of replacement parts. Generally, the cost of auto parts is stable with an average annual increase of 3% between 2017-2020. That increased to 8.5% in 2021 and 16.5% in 2022.
- Home construction costs. Between January 2020 and June 2023, home construction materials were up 35.4% and labor costs by 30%.
- Supply chain issues. Auto manufacturers have struggled to maintain new inventory resulting in the cost of new cars going up 18% over the past couple of years. Low inventory shifted the demand to used cars where the impact on costs is even worse.
- Rising Reinsurance Pricing. Reinsurance is the insurance that insurance companies purchase. Reinsurance pricing and retention (deductibles) have increased substantially.
Fortunately, there are steps you can take to help offset the rising premiums:
- Take on a larger share of the risk by increasing your auto and home insurance deductibles
- Take the time to review your coverage limits, deductibles, endorsements, and discounts with your insurance agent
- Avoid reporting small claims
- Bundle your insurance policies with one company
- Make your payments on time
- Shop your insurance occasionally but don’t switch companies often. If you do switch, make sure the new policy is in place before you cancel the current policy.
If you have questions on how to best navigate the rising costs of home and auto insurance, please reach out to your trusted advisors at Hausmann Group.
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