This blog was originally posted by Stillwater Insurance.  The original post can be found here.

We know it can be difficult to understand why your rates have gone up and we want to help.

We can all agree expenses have increased across the board, whether groceries, gas, housing, entertainment and yes, insurance. Here we will explain several factors affecting insurance rates regardless of individual circumstances.

The Nature of Insurance

Insurance rates are dependent on risk assessments. When you purchase insurance, you pay a premium to transfer the risk of damage to your property or person to the insurance company so that the company will pay a certain amount to cover damages in the event of an uncertain future event. When the risk of future damages increases and insurers face greater costs to repair or replace property, the cost of insurance increases to compensate.

Two Major Issues Impacting Insurance Costs Today

Catastrophic Weather Events

The frequency and severity of weather-related catastrophic events such as hurricanes, tropical storms, tornadoes, hailstorms, wildfires, and flooding have increased in recent years. Such events impact property, auto and commercial properties, causing more claims to be filed. More claims paid out by insurance carriers translates to higher rates for consumers, as insurance companies strive to ensure they will have the funds to pay future claims as this catastrophic weather trend continues.

According to the NOAA National Centers for Environmental Information, as of November 2023 the US has had 25 confirmed weather disaster events with losses exceeding $1 billion each. 1 In comparison, the last 3 years had 60 catastrophic events, the entire decade from 2010-2019 had 131 events, and the 90’s had only 57. For more information, visit the National Centers for Environmental Information.

Inflation and Supply Chain Issues

Since 2020, supply chain issues have resulted in higher costs of materials and repair delays. In addition, inflation and labor shortages in industries needed to repair property such as construction, have led to increased demand, higher pricing, and lengthy delays. This means higher costs to insurance companies when paying claims.

  • Roofing materials pricing increased 14.5% between Oct 2021and October 2022. During that same period, lumber products pricing increased 6.2%.2
  • Vehicle repair costs have increased even more dramatically. According to CCC Intelligent Solutions, the cost of auto parts has increased anywhere between 15.4% (for rear bumpers) to 56.4% (for windshields) when comparing 2019 to 2023 repair costs.3

As construction costs and auto repair costs rise and extreme weather events continue to cause catastrophic damage, insurers are meeting their obligations to their policy holders by paying claims. The consumers’ cost of insurance, your cost, increases as insurers seek more rate to cover the higher cost of providing insurance in this climate. Consumers usually see rate revisions take effect at the renewal of their policy after their state’s Department of Insurance approves the insurance company’s request to increase rates. Catastrophic weather, inflation and supply chain issues affect insurance companies and consumers regardless of a consumer’s claims experience, history or insurance bureau score.*

What else can affect your rate?

  • Claims history – Though not every claim will affect rates, the frequency and types of claims may indirectly affect your insurance rates in the future. It is important to discern when to call your insurer with a claim by considering the extent of the damage; is there minor damage that can be easily remedied or is the damage severe enough to require major repair work?
  • Home improvements – the value of your home may have increased.
  • Newer vehicles – more expensive to repair.
  • Age – your age can impact your rate.
  • Other life events – such as adding and removing family members to your household.
  • Discounts – make sure you are getting all the discounts you are eligible for.

How can I help manage the cost of my insurance?

  • Deductible – Increase your deductible to bring down your premium. A deductible represents the amount you will contribute towards the repairs before your insurance company pays for damages.
  • Discounts – Ask your agent or Stillwater customer service representative to make sure all the discounts you are eligible for are applied to your policy.

The Insurance Bureau Score is one of many factors used by insurance carriers to calculate the risk of insuring an individual. It indicates how likely someone is to have insurance claims in the future and whether the cost of those claims relative to your premiums will be higher or lower than average.4

1 NOAA National Centers for Environmental Information (NCEI), U.S. Billion-Dollar Weather and Climate Disasters, (2022). https://www.ncdc.noaa.gov/billions;

2 U.S. Bureau of Labor Statistics, Producer Price Index by Commodity: Inputs to Industries: Net Inputs to Residential Construction, Goods, October 2022;

3 (2023, October) What’s Driving the Rise in Auto Costs. Best’s Review. https://bestsreview.ambest.com/edition/2023/october/docs/

4 FICO, Credit Scores vs. Insurance Scores, (2024). https://insurancescores.fico.com/CreditvInsurance#