It has been a tenuous last 3 years for insurance overall, and yet 2024 indicators point to an even wilder ride. From the pandemic impacting everything from the availability and cost of goods and labor in the home/auto markets in 2020 and 2021, unexpected and huge losses from the Marshall fire in 2022 and enormous wind/hail season losses and inflationary impacts in 2023, the insurance industry in Colorado feels like it may never be the same.
What’s the outlook for 2024?
Hold on tight people because already the insurance market for personal lines is off to a rough and dizzying ride. In 2024, Texas based American National group is set to stop offering homeowners insurance in Colorado along with 8 other states. While most carriers aren’t pulling out of Colorado officially, we are seeing a wide range of carriers not issuing new personal lines business including homes and condo policy. Other carriers are getting more selective about their current portfolio of clients by adjusting underwriting guidelines to accept fewer new clients and issuing non-renewal notices to current clients including big name carriers like State Farm.
What will we see on this insurance rollercoaster in 2024?
Inflation will continue to impact both home and auto renewals. Inflation hits consumers hard on insurance. Inflation continues to increase the cost of building materials or auto parts and labor increases for any type of home or auto repair. It also increases the value and cost of new and used vehicles meaning a larger cost to carriers for repairs or total loss claims. Carriers are rating accordingly to maintain their solvency. In 2024, expect renewal ratee increase will continue in the double digits with the highest rates for people with claims and lower credit scores.
Lack of competition in the market means higher rates as people’s ability to move to new carriers gets more limited. However, having an independent insurance broker has never been more important. An independent broker can provide you with choices you may have available along with their expertise in getting you covered if you find yourself in a non-renewal situation with your current carrier. It’s nice to have a trusted expert on your side in that scenario.
Making claims guarantees higher rates in an industry that is already struggling with carrier availability. Homeowners for decades have looked to their home insurance to pay for a myriad of smaller claims. Today filing a claim might mean the difference between a typical 40% increase on your next renewal and a 100% increase situation or even getting a non-renewed. It’s time to start thinking about keeping your home insurance for large events like a total loss vs using it for claims that might be $10,000 or less. Many carriers are moving to higher deductibles in the state anyway with a 1% Wind/Hail becoming much more common. If you don’t have an agent that is available to discuss claims prior to filing, then get a new one. A good independent agent can help guide you and let you know where you stand realistically in the market before you file a claim that will impact your rates and desirability to carriers for the next 5 years.
Renewals are coming with coverage changes so an annual review of your policy has never been more critical. Reviewing it with an independent insurance agent will give you that expert advice and explain the details of your current coverage with neutrality. Changes like increased deductibles and roof coverage options for those with older roofs mean a big difference in the coverages you are getting. The changes can be beneficial to you or not, but understanding the changes and what that means to you financially is key. An independent agent will advise with neutrality, helping you understand coverages and make recommendations ensuring you are covered the way you want to be appropriate for your financial situation, goals and risk tolerance.
Tips to surviving the wild ride
Take a hard look at your financial priorities. Being able to replace your home in the event of a total loss should be first and foremost. Making sure you have the right coverage may be costly to your budget now, but it will be devastating to you financially if you skimped on coverage to save even a couple of thousand dollars annually.
Cut out more immediate pleasures and build that emergency fund. Getting your emergency fund ready to handle larger deductibles will make a loss a much more manageable situation. It will also give you more flexibility if the opportunity to save with higher deductibles is an option for you. Talk with your insurance agents to see about that and other opportunities for savings.
Increase your budget now. Take a look at the cost of your home policy and calculate a 50% increase and divide that by the number of months until your next renewal. Putting that money aside means when the time comes you will be more financially ready.
Pay your policies in full. Whenever possible opt to pay your auto policy in full. Most carriers provide a great discount by doing so and some have a 2 pay option. If it is cost prohibitive you can always start setting aside money to do it at your next renewal.
Hone your driving skills and your credit. Carriers are saving their best discounts for participation in their safe driving/monitoring programs and their best rates for those with excellent credit.
Don’t move insurance companies all the time. Moving too frequently can actually hurt your future rates. Insurance companies are looking at all types of factors to determine whether a client is desirable. In a tight market moving every 6-12 months may save you a few bucks, but you will start to become less desirable and the rates you will be offered will be higher than those that have a 2+ year history with a carrier.
Trust your independent agent. Your agent is your partner not your jailor. An independent agent knows what’s going on rate wise for you in the market with access to multiple carriers. If your agent tells you that the increased renewal is the best option, you have they are being truthful. While people think insurance agents rake in the money, the reality is like stacking nickels. No agent makes money on any one policy, they make a living by finding new and existing clients good options year after year. 2024 may not be your year for great savings, but sticking with your agent through the rough ride will ensure you have a partner that can help you find better options when they do start to become available.
Parting words of wisdom
I would like to leave you with some wise sayings that I am leaning on during this wild ride in the insurance industry in 2024.
Hope dies last, this too shall pass and expect the unexpected.
I think that about sums it up.
