Property insurance rates keep climbing, worsening affordability crisis
Home and auto insurance rates have surged in the U.S. in recent years to the point that many Americans are having trouble paying the premiums – and the price hikes are set to get worse.
Record losses from natural disasters, inflation, regulatory and reinsurance issues are all contributing to insurers moving to raise rates, in what has been a brewing crisis for consumers.
Home insurers are raising rates in the states where they can and fleeing others, putting the squeeze on some homeowners and leaving others struggling to find coverage.
A survey from Assurance IQ last fall found 63% of Americans with insurance saw their home or renters insurance rise within the past year, and 67% were hit with a rate increase on their car insurance. More than half (51%) of those surveyed said they are cutting back on spending in other areas to make room in their budgets for the added costs.
Loretta L. Worters, spokesperson of the New York-based Insurance Information Institute, recently told FOX Business that homeowners' insurance premium rates have risen significantly due to the pandemic and the state of the U.S. economy.
"Much of the increase can be attributed to supply chain issues and labor shortages driving up the cost of home repairs and replacement costs, but also rising catastrophe losses related to extreme weather and population shifts into disaster-prone regions," Worters said.
Through September 2023, there have been 23 confirmed weather and climate disasters in the U.S. this year producing losses over $1 billion, according to NOAA.
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These trends — rising costs of building materials, appliances and labor; rising insured losses related to extreme weather; and population shifts into disaster-prone locales — predate the pandemic and are unlikely to go away after COVID-19 and its disruption of the global economy fades into history, according to Worters.
"This is why homeowners’ insurance premium rates will need to increase in the years ahead," Worters told FOX Business.
Meanwhile, a recent study by car insurance app Jerry found auto insurance costs have risen 43% in just the past three years, and fresh reports indicate more steep hikes are coming.
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The Wall Street Journal reported this week that Allstate has been approved to increase auto rates by 15% in New York, 17% in New Jersey, and an eye-popping 30% in California. The outlet said California is still mulling over whether to allow Allstate to raise homeowners insurance rates by 40%.
FOX Business' Erica Lamberg contributed to this report.