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It’s probably Bidenomics and global warming.
No on Biden, yes on Global Warming, and Climate Change generally. Hurricanes in Southern California, hail and other substantial storms across the midwest, rain in the east and west. Wild fires in Canada and across the US. All these things impact reinsurers, and when reinsurers are impacted, they raise prices or reduce coverage. Reinsurance costs are passed along to insurers, and then to policyholders. Reducing reinsurance coverage means the insurers are potentially exposed, and so need to charge more for classes of business to make sure they have the money to pay claims.
Inflation is a factor, but supply chain issues are a huge part of the problem. If a mechanic can’t replace the parts in your car, and your car can’t run, then you have a rental for a longer period of time. which will cost the insurance company of the person who hit you more money. As noted above, the parts aren’t necessarily more expensive; they just aren’t available. And people are demanding more money to work in any field, including insurance and auto mechanics and body shop folks and whomever. Costs are going up. Auto insurance and homeowners insurance trade off being the loss leader for most insurers; we sell you a homeowners policy knowing it will probably generate a loss so we can sell you auto in years when auto is good. And vice versa.
And let’s not insurance fraud driving up costs. Personal property claims increasing during storms, and after fires. Fraudulent accidents. Injuries that don’t really exist.
It’s not a simple problem. But as a society, its a problem.
Insurance fraud is very rare (insurance companies have HUGE well funded anti-fraud departments). “injuries that dont exist” are only in movies. Did you know that State Farm has the biggest law firm in the country, who are salaried State Farm employees, used ONLY to fight injured people on their claims? You know what isnt rare? wrongful denial of claims. Educate yourself and stop listening to big insurance’s narrative. Insurance companies do a cost to benefit analysis and fight whenever possible to not pay out claims because that increases their bottom line. They are not victims.
Steven – I personally know people who have gone to injury attorneys following accidents that did not injure them, and left the ordeal with cash in their pockets. Similar things happen following storms – some damage to a car or house will be inflicted in a way that does not warrant coverage, but one bad storm comes through and it’s easy to frame the damage as insurable. These things make insurance more expensive for all of us.
At the same time, insurance companies definitely penny pinch when they shouldn’t and it’s a serious problem. It’s just as serious as you made it out to be.
These things are not mutually exclusive.
For the most part, our country’s infrastructure and zoning rules force every person over 16/17 years of age to travel virtually everywhere via car. This inherently leads to a system where a lot of people who shouldn’t be driving are on the roads. The system poses a risk to everybody and keeps insurance costs high. For a developed country, we have very high insurance premiums and a very high car accident death rate.
Additionally, cars are a huge sink on the American economy. Time wasted while commuting drags the economy down; car loans and car payments drag the economy down; and the negative impacts of driving have measurable impacts on cognition and public health that drag the economy down.
It’s time to be intentional about providing other means for getting around our metropolitan areas. Good transit, pedestrian, and cycling infrastructure is so important – plus, it requires less expensive infrastructure to maintain. Roads and the associated spread out sewer lines, water lines, electricity lines, etc. are expensive.
This isn’t about “a war on cars” or anything like that. Having other options does not prevent one from driving should they choose. In fact, once other options are good enough, it makes driving easier. Having fewer people on the road is a great thing for everybody, and even those who never plan on using their feet or hopping on a bus/in a train should recognize this.
Largely, America’s zoning laws and infrastructure decisions are authoritarian and resemble a planned economy. There are often several layers between elected officials and those who make decisions about what to put in public right-of-ways. Zoning laws – which almost always contain ridiculous parking minimums – are against the very spirit of a free market. Combined, we end up with a system where people have one mode of transport that is viable for full participation in day-to-day life. It’s a point of weakness in this country.
Robert H.: no, insurance fraud is a “thing”. And yes, I know about State Farm’s and other insurance companies in-house lawyers and “law firms.” And yes, they are there to handle claims against injured persons. So what? If they didn’t hire for staff attorney programs, they’d hire outside firms and in many cases pay higher claim defense expenses. Which have to be paid for by poliyholder premium.
Fraud is not just in movies. In fact, there are very few movies about insurance claims. Usually on the life insurance side…
Organized fraud rings have been broken up all across the country. I handled an interesting case years ago in which 10 more people than would fit on the inter-city bus, which was not at capacity, claimed injury. It was here in the midwest, with the trip originating in Indiana. Fortunately for the insurer, there was a priest on board, and he was the only one who stepped up to say the others were not on the bus, but arrived in cars afterwards and joined the crowd of passengers standing outside the bus before the police arrived.
The concept of what is “owed” has been blow out of proportion. Every little accident becomes a lottery ticket. Plaintiff lawyers advertise who will get you the biggest reward. Expections are inflated beyond reality.
Yes, I work in the insurance industry, in claims to be specific. Yes, I’ve had family members and friends severely injured in auto accidents. Yes, I know first hand what an auto accident can do to a person and their family.
But this story you claim about the big insurers giving the shaft to the poor little consumer is just not reality. Do insurance companies try to limit claim payments? Of course they do. And you can thank them. Because otherwise, you couldn’t begin to afford insurance. If the suit was worth so much, a lawyer would take it to trial and seek and excess judgment and then perhaps a bad faith claim assignment.
Do insurers have to make a profit? Yes. Otherwise, they go out of business. In years past, an insurer could reduce rates or be more liberal on claim payments, and make up the difference with investment returns. But that’s not been the case for several years now. Now, insurers have to make money off the insurance business to stay in business.
No, sir, I already know this topic. Very well. My information doesn’t come from Fox News, or One America, or other populist journalists. It comes from living it.
Here you go Steve N, from today’s (9/7/23) news…https://www.insurancejournal.com/news/east/2023/09/06/739206.htm
a New Jersey man who with others bilked insurance companies and telephone companies of millions on fraudulent cell phone claims…