Everywhere you go, neighbors and friends are talking about it: “Have you seen the increases in our insurance costs?” Yes, it’s true that costs are increasing throughout the economy, but what are the factors driving this increase? Politicians will cite corporate greed and other such gobbly-gook, but it is in fact the government who allows and sets the percentage of increase for all regulated insurance products. So if they allow for the increase, they clearly see factors beyond pay raises and corporate bonuses. Three main factors are driving insurance increases, and the trends tell me that the pricing increases won’t abate any time soon: First, the sticky, non-transitory inflationary pressures on the economy have infected insurance markets. 2nd, catastrophic storms and losses have driven reinsurance markets away. Finally, a phenomenon called “social inflation” is upending decades-long expectations on loss payments and settlements. Read more |
