Navigating the Storm: Key Trends in Personal Insurance from 2023

Jan 19

The insurance industry in 2023 witnessed significant changes and developments, impacting both the personal/family and commercial insurance sectors. This month we touch upon the key trends and shifts that characterized the industry, with a focus on aspects relevant to Texas, Tennessee, and our Perkins Insurance customers.

Rising costs of insurance

If you live in Texas, it’s probably not a surprise that insurance rates increased in 2023. What you might not know is that, on average they increased by a whopping 22% in Texas, which was twice the national rate. Everything might be bigger in Texas, but we can agree this is one number we’d like to be smaller! Climate change and severe weather events were a large contribution to rising costs, and Texas experienced more billion-dollar disasters in 2023 than any other year on record. These disasters have insurers experiencing heavy property losses, which send homeowners premiums higher and higher.

In Tennessee, drivers were the ones experiencing rising costs for auto insurance rates. On average, rates in Tennessee increased by 19% over the previous year. Unfortunately, Tennessee is experiencing an increase in the number of car accidents, especially serious ones. While all car accidents are expensive, car repair costs are also increasing, most likely due to rising costs of parts and labor. Either way, if you are a Tennessee driver, rates are on the rise and we will be watching closely for any breaks in the future.

The increasing gap in P&C Insurance

Across the board, the “gap” in protection has been growing in property and casualty insurance. Simply put, imagine you have insurance coverage for your home and belongings, which falls under the umbrella of Personal Lines: Personal Property and Casualty (P&C) insurance. This type of insurance is designed to protect individuals from financial losses related to their property and personal liability.

Now, the Protection Gap refers to the difference between the coverage you have and the actual financial risk you face. In simpler terms, it's the gap between what your insurance policy protects and what it might cost you in the event of a loss.

This trend suggests that despite the overall growth, personal P&C lines have yet to be able to fully meet the evolving needs of consumers. Again, turbulent weather conditions like floods, droughts, hurricanes, and tornadoes, all contribute to this gap that has been growing steadily. Inevitably, the gap will affect the insured with rising costs, or the inability to get full coverage for total losses.

Tech to the rescue!

Now, let's brighten things up with some good news! Technology has been a superhero in the insurance world. Innovations have transformed how we experience health, auto, and home insurance. Picture using an app to manage your insurance policies or getting real-time updates on your health insurance benefits - pretty neat, right? This tech-driven change is all about making insurance more accessible and easier to understand for everyone.

If you have questions or need help, friendly chatbots are there to guide you through. Reporting a claim is a breeze with digital tools, and you can keep an eye on its progress in real-time. Thanks to fancy tech like telematics and data analysis, insurers can offer you a personalized insurance plan based on your unique situation. Smart devices in your home and wearables can even help prevent accidents. Plus, some online resources and alerts keep you in the loop about your policy and important updates. So, technology has made dealing with insurance easier, personalized just for you, and more secure – making the whole insurance experience a lot better!

The inflation effect

If there was a word of the year for economists in 2023, I’d guess that word was “inflation”. Inflation has impacted all areas of our lives, from buying food at the grocery store to the rates we pay on our mortgages. As prices of goods and services rise over time, we feel it in our wallets, as our purchasing power gradually decreases.

Just like it affects the cost of everyday goods, inflation has a ripple effect on insurance. As prices rise, the replacement or repair costs for insured items also increase. For instance, if your home insurance policy was set a few years ago, the cost to rebuild or repair your home may be higher now due to inflation. The same goes for auto insurance – rising repair and replacement costs can influence premiums. Additionally, health insurance may see an impact as medical costs escalate. Consumers need to be aware that the effects of inflation can lead to adjustments in insurance premiums and coverage to ensure adequate protection against the rising costs associated with potential claims. Keeping insurance policies updated and reviewing coverage regularly becomes crucial in navigating the changing economic landscape affected by inflation.

As Perkins Insurance, we understand the dynamic nature of the insurance landscape, especially in the face of inflation. Your protection matters to us, and we want to ensure that your policies align with the evolving times.

Now is the time to take control of your financial security. If you haven't reviewed your policies recently, or if you're curious about how these trends might be impacting your coverage, give us a call. Our dedicated team is ready to assist you, providing personalized insights to ensure your insurance remains a reliable shield against life's uncertainties. Don't wait – empower yourself with the right coverage. Call Perkins Insurance today for a comprehensive policy review, because your peace of mind is our priority.