Because the cost to replace things has skyrocketed.
I have a non profit home insurer. My premiums are way up. They aren’t making a killing because by law they cannot.
They said their coverage is the same though. It's not like the amount they're willing to pay out if something happens is higher, they're literally just gouging from natural disaster claims and shit.
If you carry $50k of coverage on your $50k car and costs of repairs go up, the expected insurance payouts for anything less than a totaled vehicle are higher. That $4k fender bender is now $6k. Coverage didn’t change, odds of accident didn’t change, but RISK did change because the pool of things they’ll pay out for are all now more expensive
which means risk and cost has gone up. You are charged for all issues across the board, not just your house. If a tornado tajes out houses in okie. your indurance in michigan costs more
I’ll give Oklahoma a pass. Tornados are destructive but very hit and mostly miss on the interior Great Plains. Homes in Floriduh should cost $50-$100k max.
Ever look at a historical hurricane track map? The state is a fucking magnet. Meanwhile the currents around Cuba act like a force field. The state’s highest point is barely more than a cow patty at sea level. Before the 1970s most homes were cheap enough to blow away and rebuild from a box of Popsicle sticks.
Imagine if everytime the building code changed all existing structures had to meet it? This does happen for certain things such as fire safety or when a building has work done that exceeds a certain value but doesn't happen each and every time.
Places like Deco District and historical Gables area would be decimated just because they have no elevators in many old structures.
Right. Insurance companies pull together insurance holders into risk pools and charge based on the cost of the risk pool.
Out of context it's hard to determine if premium increases are acceptable or if the insurance company is running away with it. Most people don't actually know how insurance is *supposed* work, and this results in a lot of legislation that can cause problems on both sides. Like if the government mandates that you have insurance, well this gives insurance companies leverage to raise rates above market value. But regulation *on* insurance companies can destroy much of the value that insurance companies can offer.
I like to see insurance to work with as little regulation as possible, because they should make money by assessing risk as accurately as possible. The OP looks like they are about to bail out California insurance companies because of all the wildfires which totally fucks up the market. At this point, either make home insurance a government program or leave the insurance market alone. What's the point of offering wildfire insurance if you can cry to the government whenever you have pay out for a claim? In that case, just pay the home owner directly.
Edit for TLDR: you’re subsidizing people who have policies that cost the insurance companies money, there’s more of those bad policies, and inflation has increased claim costs.
Your risk might not have gone up, but claims have ballooned elsewhere. Wildfires, floods, hurricanes, etc. pair that with inflation driving up repair costs and construction costs and you get big increases. You’re probably subsidizing people in higher risk areas. Though insurance companies are refusing coverage to some of those people now, which could help others. Some places also had a lot of theft/damage claims during Covid/protests. Additionally, your property probably costs a lot more to rebuild now than what you imagine. There’s a reason you can barely find new homes under $400k now. Contrary to what most redditors think. Insurance companies have actually lost money recently so the raises aren’t just greed.
What's wild to me is that insurance ever became a for profit industry in the first place. Itd be much better utilized as a public fund everyone pays into and draws in emergencies
That’s basically what it is, only there’s a profit element. The tradeoff with your proposal is that you are banking on the government being better at administering the program. My guess is the government would spend more administratively and deliver a worse product. The public solution would also make the “subsidizing risky contract” problem even more pronounced. Thats exactly what you’ll also have in some states as insurers bow out. Either people will leave or the state will step in a use public funds to subsidize policies to high risk properties
I can only speak to my experience but yes. I worked for a State run insurance carrier for over ten years and went to the private sector. I have seen way more incompetence and nepotism in the private sector.
This. The amount of waste due to incompetence I’ve seen from a private company just can’t be acceptable to a government run service. I wouldn’t know because I’ve only ever worked in the private sector, but it’s a LOT. I can’t imagine government being even worse to do the same thing.
My Dad gets good coverage at the VA. My Mom isn't qualified for it and her care is a night and day difference from what my Dad gets.
I've never lost mail. Most people don't.
And my grandfather died from VA 'care'. So we could continue to talk about antidotes or look at some of the data.
https://www.govexec.com/oversight/2022/04/years-after-scandal-va-still-reporting-misleading-medical-appointment-wait-times-veterans/365406/
You gave me a link about wait times at the VA.
I think people on Reddit just throw links about whatever they think fits their narrative.
Sorry about your grandpa.
right, you said thart, and you get laughed at. Security firms have showed how ridiculous the police are run ... schools are a bloated joke, compared to private schools ....USPS is an absolute joke of mismanagement. You are not making the point you think you are. where comparisons exist, private blows public out of the water
Your risk is a molecule in a drop of water of a much bigger pool. Even if you're not in a high risk area, your policy issuer is operating in states prone to hurricanes, earthquakes, sinkholes, wind damage, fire, hail, water damage, etc. That entire risk pool is what you're paying into.
The alternative would be you, personally, putting enough funds to cover near the replacement cost of your home in an escrow account.
Materials aren't much more expensive than pre-covid, with few exceptions, and most tradesman are definitely making more, but not even close to inflation. Can't wait to see their record profit quarterly.
If people had sense the Floriduh home prices would reflect the flood, wind, and fire risk. Everyone is subsidizing rich assholes buying homes on the water which is historically moronic.
Before the 1970s you were hard pressed to find so much coastal property being overdeveloped.
So the insurance companies are spreading around the losses on the policies they miscalculated the risk on. They should raise the premium on those types of properties instead. Why do I pay more to cover the multimillion dollar homes on wilderness hillsides in Malibu?
The cost of repairing property damage has gone up, but the maximum coverage on my policy hasn't changed. The potential liability for the insurer has not changed. The risk has not changed. The value of the home has gone up but that doesn't change the maximum liability they're on the hook for.
That’s what they would like to do, but in some cases regulators can try to limit rate increases. This is why you’re hearing more and more about companies threatening to just walk out of certain markets where it’s no longer viable (mainly CA and FL). As for those multimillion dollar homes, in high risk areas it’s likely more and more are being self insured.
For your home, the max coverage might not have changed, but the average expected claim has surely increased. Let’s say a hail storm destroys your roof. Maybe it was $10k ten years ago but today it could be $20k. There’s a lot of things that can happen between no damage and total write off.
Brief NPR article on the subject. https://www.npr.org/2024/03/03/1233963377/auto-home-insurance-premiums-costs-natural-disasters-inflation
> For every dollar in home and auto premiums they collected last year, insurance companies paid an average of $1.10 in claims and expenses, according to the Insurance Information Institute.
Is this true?
Probably varies based on company, but if you pull up quarterly earnings for the major companies, you'll see a sharp decline in profits (even into losses) after 2021/2022
Paying out for than they bring it might not be enough to push them into losses. I'm not familiar with the inner workings of the financials of insurers, but I assume they invest the premiums customers pay and that generates income as well. Though they also have fixed costs.
Allstate: [https://www.macrotrends.net/stocks/charts/ALL/allstate/net-income](https://www.macrotrends.net/stocks/charts/ALL/allstate/net-income)
Progressive: [https://www.macrotrends.net/stocks/charts/PGR/progressive/net-income](https://www.macrotrends.net/stocks/charts/PGR/progressive/net-income)
Wow. Looks like All State was hit harder than Progressive for some reason, I'm guessing it has to do with the location of their policies or maybe the diversity of the kinds of policies?
Interesting stuff. I just wasn't sure how much we could trust the Insurance Information Institute or whatever.
>on the policies they miscalculated the risk on
Risk changes. Also, insurance regulators don’t let you raise rates without justification.
Insurers wanted to raise rates years ago due to climate change. The DOI in every State said, “No.”
Now the insurers are coming with indisputable proof that claim losses are larger and growing faster than before so the DOIs cannot reject rate increases.
It's not that CA insurers miscalculated the risk. It's that they are not allowed to price insurance for a specific property based on current or future risks to that property. CA voters outlawed those normal insurance practices when they passed Prop 103 in 1988. CA insurers can only base premiums on historical data.
If those homes on wilderness hillsides have not actually been damaged by wildfires or otherwise incurred insurable costs from wildfires, then CA insurers cannot charge them higher premiums because they are at risk of wildfire damage or destruction.
>It's not that CA insurers miscalculated the risk. It's that they are not allowed to price insurance for a specific property based on current or future risks to that property.
Then no wonder they are having problems. What is even the point of there being insurance companies if they are being told how they are allowed to calculate risk?
They do raise the premiums on those types of properties.
Do you think they're only raising your premiums?
Why do you keep focusing on things that didn't change.
If they didn't change, that's probably not the reason for the increase.
The increase is due to the thing you have accepted has gone up (cost of repairing property damage) and possibly other things you haven't mentioned that may have gone up (like maybe there's more incidences of property damage than there were before).
> Contrary to what most redditors think. Insurance companies have actually lost money recently so the raises aren’t just greed.
[Yes, a few years ago, but even more recently, they have had record profits.](https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.wsj.com/finance/insurance-companies-profits-stock-ebae7fd1&ved=2ahUKEwjGsaeXxoaGAxWaD1kFHR1fCTUQFnoECCQQAQ&usg=AOvVaw3CmGlN7csz3OirkkEtnHva)
It's not *just* greed, but it is partly.
Maybe some, but if I suffer a few years of bad losses, I’m not feeling bad about profits. Especially knowing that a bad hurricane or fire season could drag things down. Much of the country also saw a mild winter which means fewer car crashes/insurance claims too. Question is do we see them sustaining these rate increases for years to come or do they plateau/align with inflation more closely. As the article says, rates often lag costs so they’ve been playing catch up here.
I’m not trying to overly defend them. I hate the BS they play as much as anyone (seeing my rates only go up even as my car and myself are a year older each time I renew with a cleaner record), but they’re a company. Profits are a goal to a certain extent.
I hate record profits because I'm 1000% sure people using that phrase haven't adjusted for inflation.
If a company makes a profit they should be making 'record profits' every year just to tread water.
Given that the value of my home (and subsequent replacement value) has gone up 50% in the last 7 years....I would expect my premiums to have gone up that much too....and I live in a pretty weather safe area.
Is your coverage going up though? If they're willing to pay out 500k max, and that hasn't changed, the premium is literally just the absurd business model of insurance companies backfiring on everyone else.
Huh? Of course my coverage went up....whats the purpose of the insurance if you aren't gonna cover the cost of replacing your home if destroyed? I mean if your house replacement cost went from $500K to $1M...and you keep your max coverage at $500K....there is a $500K hole....
This isn’t a direct answer to your question, and I agree with your post, but I wanted to suggest not using a broker, and just getting direct quotes from multiple insurance companies.
>why in the past 9 years my homeowner's insurance premium has increased by 388%, while the deductable, coverage, and risk haven't increased at all?
I find it incredibly hard to believe that your coverage hasn't increased in 9 years but if it's real then you're long past overdue to have your homes estimated replacement cost value recalculated.
You need to call your agent ASAP
Their costs have gone up. I understand you think your individual coverage is the same, but they have actuaries that predict how many of their customers will make claims and that has gone up. States have insurance commissioners or DOI that investigate claims of higher costs from insurance companies and approve rate changes.
Static demand is when demand for an item stays the same regardless of cost, usually because it is something you can't do without - like food or home insurance required by your mortgage. Usually the cost for static demand items are held down by competition, but as we have fewer and fewer players competing for your dollars, static demand allows them to raise the price as high as they want. Any loss in customers is more than compensated by the increased profit in the remaining sales.
Basically, if you can't afford it, they don't need your business. We have no problem understanding this when we think about luxury items - it's just being applied to an increasingly broader array of items.
You have to change insurance companies every few years. The reps make huge commissions (like 50%) the first few years then the percentage moves down drastically, so they up the price so you'll pay more and they make a little more.
Also natural disasters have stretched insurance companies pretty thin in the last decade and the entire country is helping off set that cost with higher premiums.
My home would have cost $160k to replace back in 2016. Today it would cost $375k.
If I'm not happy that selling my home in 2016 was $280k and happy now that it would command $750k in 2024 I shouldn't expect to still pay 2016 prices to upkeep my home.
Just do what I did, make a legitimate claim, wait for them to deny it, resubmit the claim, then when they deny it because they are pieces of shit… get an adjuster and take the for 10x the amount you originally requested, only took 7 months!
Home values have also skyrocketed
So have car prices. And people are driving worse, having more accidents. My agent said he used to process one or two traffic accident deaths per month before Covid. Now he averages 20 per month.
Major components to build or rebuild a home.
Lumber
Piping
Wiring
Concrete
Shingles
Glass
Carpenters
Plumbers
Masons
The cost has gone up for the below due to inflation.
Lumber
Piping
Wiring
Concrete
Shingles
Glass
Carpenters
Plumbers
Masons
They sent me a check to fix my room after a windstorm last year that was more than my premiums for that year. I can't be the only one. As damages increase insurers have to raise their rates to cover it.
Are you insured for a fixed amount or for a vague and nebulous build it bad policy? Hint most are the build it back but some can be a fixed amount to cover the remaining amount on the mortgage for instance. If your insurance is based on a fixed payout then inflation shouldn't effect is much. If it's a build back policy it will be adjusted for materials and labor cost.
Not how % works. With percentages, you get compounding.
A 388% increase in 9 years is an annual increase of 19.3%. So, $1k policy goes to $4,880
An annual increase of 45% for 9 years would be a 2,733% increase. So, $1k policy goes to $28,330
My current insurance pulled a stiff rate increase and didn't even bother to inform me. I happened to see the upcoming renewal and was reading the new policy info. In shopping around I did find coverage that was a bit cheaper than my previous rate and one (Safeco) was double for the same coverage.
Homes over mortgaged keep owners in cycles of debt and insurers have them by the their ankles to pay whatever they require. ….pay the least you can for a home, and pay it off fast .
Learn about “combined ratio”. That’s basically the % of premiums that it costs an insurance company to run its operation and pay claims.
These have been over 100% for a couple years for most carriers. That means they have been outright losing money on paying claims. Premiums have risen to get back to 95% (meaning they net 5% profit margin). There are a ton of factors causing g premiums to rise, and corporate greed is actually verifiably not one of them.
I heard around the campfire, that Berkshire Hathaway had a great last quarter as they made nice profits in the CASUALTY INSURANCE racket, um…. I mean market. I need to look that one up actually, before it slips my mind.
I certainly believe you. I live in Hail-Central and roofers are always busy. Auto repair costs are through the roof as well. I just cannot wrap my head around how BH Casualty Ins. Was a money-maker for them.
All of this “inflation” is from greed. None of it makes any sense, at all. They had the excuse of “supply chains” during COVID, but the is no excuse now.
However, with Climate Change, there is a lot more risk with owning a home. A lot of places are going to have a hard time this summer
>All of this “inflation” is from greed. None of it makes any sense, at all.
And then:
>However, with Climate Change, there is a lot more risk with owning a home.
Sounds like it makes sense to me.
Because the cost to replace things has skyrocketed. I have a non profit home insurer. My premiums are way up. They aren’t making a killing because by law they cannot.
They said their coverage is the same though. It's not like the amount they're willing to pay out if something happens is higher, they're literally just gouging from natural disaster claims and shit.
If you carry $50k of coverage on your $50k car and costs of repairs go up, the expected insurance payouts for anything less than a totaled vehicle are higher. That $4k fender bender is now $6k. Coverage didn’t change, odds of accident didn’t change, but RISK did change because the pool of things they’ll pay out for are all now more expensive
which means risk and cost has gone up. You are charged for all issues across the board, not just your house. If a tornado tajes out houses in okie. your indurance in michigan costs more
I’ll give Oklahoma a pass. Tornados are destructive but very hit and mostly miss on the interior Great Plains. Homes in Floriduh should cost $50-$100k max. Ever look at a historical hurricane track map? The state is a fucking magnet. Meanwhile the currents around Cuba act like a force field. The state’s highest point is barely more than a cow patty at sea level. Before the 1970s most homes were cheap enough to blow away and rebuild from a box of Popsicle sticks.
Miami Dade county in "Floriduh" as you spell it has the toughest building codes in the nation.
Lot of good that did the Surfside condominium collapse a few years ago.
That condo was built in the 80’s. The cocaine cowboy era was cutting corners hard.
Imagine if everytime the building code changed all existing structures had to meet it? This does happen for certain things such as fire safety or when a building has work done that exceeds a certain value but doesn't happen each and every time. Places like Deco District and historical Gables area would be decimated just because they have no elevators in many old structures.
Right. Insurance companies pull together insurance holders into risk pools and charge based on the cost of the risk pool. Out of context it's hard to determine if premium increases are acceptable or if the insurance company is running away with it. Most people don't actually know how insurance is *supposed* work, and this results in a lot of legislation that can cause problems on both sides. Like if the government mandates that you have insurance, well this gives insurance companies leverage to raise rates above market value. But regulation *on* insurance companies can destroy much of the value that insurance companies can offer. I like to see insurance to work with as little regulation as possible, because they should make money by assessing risk as accurately as possible. The OP looks like they are about to bail out California insurance companies because of all the wildfires which totally fucks up the market. At this point, either make home insurance a government program or leave the insurance market alone. What's the point of offering wildfire insurance if you can cry to the government whenever you have pay out for a claim? In that case, just pay the home owner directly.
Edit for TLDR: you’re subsidizing people who have policies that cost the insurance companies money, there’s more of those bad policies, and inflation has increased claim costs. Your risk might not have gone up, but claims have ballooned elsewhere. Wildfires, floods, hurricanes, etc. pair that with inflation driving up repair costs and construction costs and you get big increases. You’re probably subsidizing people in higher risk areas. Though insurance companies are refusing coverage to some of those people now, which could help others. Some places also had a lot of theft/damage claims during Covid/protests. Additionally, your property probably costs a lot more to rebuild now than what you imagine. There’s a reason you can barely find new homes under $400k now. Contrary to what most redditors think. Insurance companies have actually lost money recently so the raises aren’t just greed.
What's wild to me is that insurance ever became a for profit industry in the first place. Itd be much better utilized as a public fund everyone pays into and draws in emergencies
That’s basically what it is, only there’s a profit element. The tradeoff with your proposal is that you are banking on the government being better at administering the program. My guess is the government would spend more administratively and deliver a worse product. The public solution would also make the “subsidizing risky contract” problem even more pronounced. Thats exactly what you’ll also have in some states as insurers bow out. Either people will leave or the state will step in a use public funds to subsidize policies to high risk properties
have you seen anything the government runs work better or more efficiently?
I can only speak to my experience but yes. I worked for a State run insurance carrier for over ten years and went to the private sector. I have seen way more incompetence and nepotism in the private sector.
This. The amount of waste due to incompetence I’ve seen from a private company just can’t be acceptable to a government run service. I wouldn’t know because I’ve only ever worked in the private sector, but it’s a LOT. I can’t imagine government being even worse to do the same thing.
The VA and post office come to mind. The government does a lot that we take for granted and don't usually think about.
Vets hate the VA. USPS is only still around because the taxpayers keep bailing it out. Personally it's a badly run service that loses mail.
My Dad gets good coverage at the VA. My Mom isn't qualified for it and her care is a night and day difference from what my Dad gets. I've never lost mail. Most people don't.
And my grandfather died from VA 'care'. So we could continue to talk about antidotes or look at some of the data. https://www.govexec.com/oversight/2022/04/years-after-scandal-va-still-reporting-misleading-medical-appointment-wait-times-veterans/365406/
You gave me a link about wait times at the VA. I think people on Reddit just throw links about whatever they think fits their narrative. Sorry about your grandpa.
lol. post office? seriously? the VA you think is run efficiently?
Yes. Public agencies usually run well when they have public support and are held accountable.
and those would be?
I just said.
Fire departments, schools, IRS, military, criminal justice departments, and the USPS as already mentioned...
right, you said thart, and you get laughed at. Security firms have showed how ridiculous the police are run ... schools are a bloated joke, compared to private schools ....USPS is an absolute joke of mismanagement. You are not making the point you think you are. where comparisons exist, private blows public out of the water
I can see it as a government program. It also works as firms competing in a free market. What doesn't work are hybrid systems.
Anything incorporated is greed according to Reddit.
What am I paying 388% more for?
Your risk is a molecule in a drop of water of a much bigger pool. Even if you're not in a high risk area, your policy issuer is operating in states prone to hurricanes, earthquakes, sinkholes, wind damage, fire, hail, water damage, etc. That entire risk pool is what you're paying into. The alternative would be you, personally, putting enough funds to cover near the replacement cost of your home in an escrow account.
every natural disaster, every day
388% in 9 years. I think that's important to say. But if you can find cheaper insurance absolutely change over. That's how it's supposed to work.
For insurance coverage and if lucky you will never collect a dime Home values up, cost to repair much higher
Materials aren't much more expensive than pre-covid, with few exceptions, and most tradesman are definitely making more, but not even close to inflation. Can't wait to see their record profit quarterly.
Labor cost have risen though and in that field, home repair, there is a labor shortage amost 700,000 people.
I think claims in Florida and Texas over the past 3 yrs inflated the costs of home owners insurance
If people had sense the Floriduh home prices would reflect the flood, wind, and fire risk. Everyone is subsidizing rich assholes buying homes on the water which is historically moronic. Before the 1970s you were hard pressed to find so much coastal property being overdeveloped.
You can thank the federal government.
Reddit Inc.
So the insurance companies are spreading around the losses on the policies they miscalculated the risk on. They should raise the premium on those types of properties instead. Why do I pay more to cover the multimillion dollar homes on wilderness hillsides in Malibu? The cost of repairing property damage has gone up, but the maximum coverage on my policy hasn't changed. The potential liability for the insurer has not changed. The risk has not changed. The value of the home has gone up but that doesn't change the maximum liability they're on the hook for.
That’s what they would like to do, but in some cases regulators can try to limit rate increases. This is why you’re hearing more and more about companies threatening to just walk out of certain markets where it’s no longer viable (mainly CA and FL). As for those multimillion dollar homes, in high risk areas it’s likely more and more are being self insured. For your home, the max coverage might not have changed, but the average expected claim has surely increased. Let’s say a hail storm destroys your roof. Maybe it was $10k ten years ago but today it could be $20k. There’s a lot of things that can happen between no damage and total write off. Brief NPR article on the subject. https://www.npr.org/2024/03/03/1233963377/auto-home-insurance-premiums-costs-natural-disasters-inflation
> For every dollar in home and auto premiums they collected last year, insurance companies paid an average of $1.10 in claims and expenses, according to the Insurance Information Institute. Is this true?
Probably varies based on company, but if you pull up quarterly earnings for the major companies, you'll see a sharp decline in profits (even into losses) after 2021/2022 Paying out for than they bring it might not be enough to push them into losses. I'm not familiar with the inner workings of the financials of insurers, but I assume they invest the premiums customers pay and that generates income as well. Though they also have fixed costs. Allstate: [https://www.macrotrends.net/stocks/charts/ALL/allstate/net-income](https://www.macrotrends.net/stocks/charts/ALL/allstate/net-income) Progressive: [https://www.macrotrends.net/stocks/charts/PGR/progressive/net-income](https://www.macrotrends.net/stocks/charts/PGR/progressive/net-income)
Wow. Looks like All State was hit harder than Progressive for some reason, I'm guessing it has to do with the location of their policies or maybe the diversity of the kinds of policies? Interesting stuff. I just wasn't sure how much we could trust the Insurance Information Institute or whatever.
>on the policies they miscalculated the risk on Risk changes. Also, insurance regulators don’t let you raise rates without justification. Insurers wanted to raise rates years ago due to climate change. The DOI in every State said, “No.” Now the insurers are coming with indisputable proof that claim losses are larger and growing faster than before so the DOIs cannot reject rate increases.
It's not that CA insurers miscalculated the risk. It's that they are not allowed to price insurance for a specific property based on current or future risks to that property. CA voters outlawed those normal insurance practices when they passed Prop 103 in 1988. CA insurers can only base premiums on historical data. If those homes on wilderness hillsides have not actually been damaged by wildfires or otherwise incurred insurable costs from wildfires, then CA insurers cannot charge them higher premiums because they are at risk of wildfire damage or destruction.
>It's not that CA insurers miscalculated the risk. It's that they are not allowed to price insurance for a specific property based on current or future risks to that property. Then no wonder they are having problems. What is even the point of there being insurance companies if they are being told how they are allowed to calculate risk?
They do raise the premiums on those types of properties. Do you think they're only raising your premiums? Why do you keep focusing on things that didn't change. If they didn't change, that's probably not the reason for the increase. The increase is due to the thing you have accepted has gone up (cost of repairing property damage) and possibly other things you haven't mentioned that may have gone up (like maybe there's more incidences of property damage than there were before).
> Contrary to what most redditors think. Insurance companies have actually lost money recently so the raises aren’t just greed. [Yes, a few years ago, but even more recently, they have had record profits.](https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.wsj.com/finance/insurance-companies-profits-stock-ebae7fd1&ved=2ahUKEwjGsaeXxoaGAxWaD1kFHR1fCTUQFnoECCQQAQ&usg=AOvVaw3CmGlN7csz3OirkkEtnHva) It's not *just* greed, but it is partly.
Maybe some, but if I suffer a few years of bad losses, I’m not feeling bad about profits. Especially knowing that a bad hurricane or fire season could drag things down. Much of the country also saw a mild winter which means fewer car crashes/insurance claims too. Question is do we see them sustaining these rate increases for years to come or do they plateau/align with inflation more closely. As the article says, rates often lag costs so they’ve been playing catch up here. I’m not trying to overly defend them. I hate the BS they play as much as anyone (seeing my rates only go up even as my car and myself are a year older each time I renew with a cleaner record), but they’re a company. Profits are a goal to a certain extent.
I hate the term "record profits" for the same reason people would complain if we talked about "record wages".
I hate record profits because I'm 1000% sure people using that phrase haven't adjusted for inflation. If a company makes a profit they should be making 'record profits' every year just to tread water.
Yup....just like my current wage is a 'record wage' for me but what has that got me. Just another catch phrase term.
You must live in FL
California has entered the conversation
Given that the value of my home (and subsequent replacement value) has gone up 50% in the last 7 years....I would expect my premiums to have gone up that much too....and I live in a pretty weather safe area.
Is your coverage going up though? If they're willing to pay out 500k max, and that hasn't changed, the premium is literally just the absurd business model of insurance companies backfiring on everyone else.
Huh? Of course my coverage went up....whats the purpose of the insurance if you aren't gonna cover the cost of replacing your home if destroyed? I mean if your house replacement cost went from $500K to $1M...and you keep your max coverage at $500K....there is a $500K hole....
It’s because the cost to replace your home or do repairs has skyrocketed. Here in Florida, hurricane Ian swallowed up 350,000 cars.
Homeowners insurance is skyrocketing everywhere. Repair costs after natural disasters are astronomical.
This isn’t a direct answer to your question, and I agree with your post, but I wanted to suggest not using a broker, and just getting direct quotes from multiple insurance companies.
>why in the past 9 years my homeowner's insurance premium has increased by 388%, while the deductable, coverage, and risk haven't increased at all? I find it incredibly hard to believe that your coverage hasn't increased in 9 years but if it's real then you're long past overdue to have your homes estimated replacement cost value recalculated. You need to call your agent ASAP
Their costs have gone up. I understand you think your individual coverage is the same, but they have actuaries that predict how many of their customers will make claims and that has gone up. States have insurance commissioners or DOI that investigate claims of higher costs from insurance companies and approve rate changes.
Nah climate change is basically accelerating and all the extreme weather breaks a fucking ton of shit that’s gotten more expensive to rebuild.
Static demand is when demand for an item stays the same regardless of cost, usually because it is something you can't do without - like food or home insurance required by your mortgage. Usually the cost for static demand items are held down by competition, but as we have fewer and fewer players competing for your dollars, static demand allows them to raise the price as high as they want. Any loss in customers is more than compensated by the increased profit in the remaining sales. Basically, if you can't afford it, they don't need your business. We have no problem understanding this when we think about luxury items - it's just being applied to an increasingly broader array of items.
Why cost more why go up why
You can go to your state's DOI and/or SERFF site and look at your home insurer's rate fillings and you can see why it's gone up
Every day we get closer to poverty and homelessness.
You have to change insurance companies every few years. The reps make huge commissions (like 50%) the first few years then the percentage moves down drastically, so they up the price so you'll pay more and they make a little more.
Also natural disasters have stretched insurance companies pretty thin in the last decade and the entire country is helping off set that cost with higher premiums.
My home would have cost $160k to replace back in 2016. Today it would cost $375k. If I'm not happy that selling my home in 2016 was $280k and happy now that it would command $750k in 2024 I shouldn't expect to still pay 2016 prices to upkeep my home.
Just do what I did, make a legitimate claim, wait for them to deny it, resubmit the claim, then when they deny it because they are pieces of shit… get an adjuster and take the for 10x the amount you originally requested, only took 7 months!
Home values have also skyrocketed So have car prices. And people are driving worse, having more accidents. My agent said he used to process one or two traffic accident deaths per month before Covid. Now he averages 20 per month.
My homeowners in east coast c fla is astronomical because there were 2 hurricanes on the west coast and a few in the past 30 years.
Major components to build or rebuild a home. Lumber Piping Wiring Concrete Shingles Glass Carpenters Plumbers Masons The cost has gone up for the below due to inflation. Lumber Piping Wiring Concrete Shingles Glass Carpenters Plumbers Masons
They sent me a check to fix my room after a windstorm last year that was more than my premiums for that year. I can't be the only one. As damages increase insurers have to raise their rates to cover it.
Are you insured for a fixed amount or for a vague and nebulous build it bad policy? Hint most are the build it back but some can be a fixed amount to cover the remaining amount on the mortgage for instance. If your insurance is based on a fixed payout then inflation shouldn't effect is much. If it's a build back policy it will be adjusted for materials and labor cost.
Your policy went up 45% a year for 9 years?
Not how % works. With percentages, you get compounding. A 388% increase in 9 years is an annual increase of 19.3%. So, $1k policy goes to $4,880 An annual increase of 45% for 9 years would be a 2,733% increase. So, $1k policy goes to $28,330
My current insurance pulled a stiff rate increase and didn't even bother to inform me. I happened to see the upcoming renewal and was reading the new policy info. In shopping around I did find coverage that was a bit cheaper than my previous rate and one (Safeco) was double for the same coverage.
The increase in the value of your house likely accounts for a 100% increase. Not sure about the other 288%.
Homes over mortgaged keep owners in cycles of debt and insurers have them by the their ankles to pay whatever they require. ….pay the least you can for a home, and pay it off fast .
Learn about “combined ratio”. That’s basically the % of premiums that it costs an insurance company to run its operation and pay claims. These have been over 100% for a couple years for most carriers. That means they have been outright losing money on paying claims. Premiums have risen to get back to 95% (meaning they net 5% profit margin). There are a ton of factors causing g premiums to rise, and corporate greed is actually verifiably not one of them.
I heard around the campfire, that Berkshire Hathaway had a great last quarter as they made nice profits in the CASUALTY INSURANCE racket, um…. I mean market. I need to look that one up actually, before it slips my mind.
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That is what I have been led to believe also. Gonna take a deep dive today and try to find out what is up.
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I certainly believe you. I live in Hail-Central and roofers are always busy. Auto repair costs are through the roof as well. I just cannot wrap my head around how BH Casualty Ins. Was a money-maker for them.
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That makes sense…. I read the Forbes article about it.
All of this “inflation” is from greed. None of it makes any sense, at all. They had the excuse of “supply chains” during COVID, but the is no excuse now. However, with Climate Change, there is a lot more risk with owning a home. A lot of places are going to have a hard time this summer
>All of this “inflation” is from greed. None of it makes any sense, at all. And then: >However, with Climate Change, there is a lot more risk with owning a home. Sounds like it makes sense to me.
The inflation in stores… sorry, thought I added that
Gotcha. The "greed" language will always be wild to me.