Like seemingly every corner of the world and most other industries, the insurance market has been impacted by the events of this past year.
Material prices are at an all time high, we have supply chain issues for vehicle parts, new safety protocols that have impacted human interactions at the time of a claim – just to name a few. Things cost more, take more time, and inevitably feel different. We miss the old days but are embracing the new!
While a lot in life was put on pause or certainly forced to slow down, the threat of a loss never takes a break.
Homeowner’s Insurance
Weather events and construction costs continue to increase
We continue to see an uptick in both the frequency and severity of convective storms. This is having a major impact on our local homeowners market. At a national level, we have seen some huge catastrophes in the past couple of years—from severe weather in Texas and Florida to all the fire devastation in California. The Iowa Derocho just this past August was the costliest thunderstorm in U.S. history.
Weather events with a $1billion price tag have more than doubled this decade compared to last.
There is a tremendous amount of volatility in weather patterns creating uncertainty in the homeowners insurance market as it relates to coverage offerings and pricing outlook.
On top of this, the construction and real estate markets continue to boom at historic levels. According to the National Association of Home Builders, material prices are up 180% since this time last year. Have we hit the peak? When will it pop? Time will tell….
Auto Insurance
Underinsured drivers and auto safety improvements
The auto market is an interesting study in its own right. While auto usage is down significantly due to the pandemic and remote work, the reality is that roads still present their own unique set of challenges. In our home state of Minnesota, even with less drivers on the road, we saw a 30% increase in fatal accidents in 2020. We’re on pace to exceed that already in 2021.
Another concern we continue to monitor are uninsured drivers. 1 in 8 drivers does not have insurance. Once you factor in drivers who are under-insured – 25% of the cars on the road don’t have sufficient coverage. This is fueled by easy to access online providers (i.e. the “name your price” and “15 minutes could save you” companies) and quite frankly a lack of reform at the state level to create minimum requirements that are more inline with today’s cost of living standards.
1 in 4 drivers likely does not have adequate insurance, creating a potentially dangerous situation for all drivers.
What is exciting are the advancements in car safety. All the buzz is around going fully autonomous, but the real difference makers are the advanced safety features (sensors, cameras, crash avoidance, etc) that your every day vehicle now has when you drive it off the lot.
The increase in safety features is matched by the increased cost to repair. A basic windshield replacement commonly used to be $400-$500. Today, by the time you get the glass with the sensors in it, install and calibrate it is a $1500 bill. The same logic applies to bumpers, headlamps, etc.
Overall though, auto insurance seems to be much more stable compared to its counterpart on the homeowners side. We anticipate a ton of disruption and innovation here in the next decade. We’re buckling up, pun intended, to push for positive change to a system that has moved at a snails pace for decades.
It’s important to plan now
Insurance is not just a product, it’s a promise. It’s peace of mind. With change, new decisions are needed. Strategies tweaked. Plans get adjusted. We feel fortunate that we get to play a role in protecting the well being of our clients. In these uncertain times, it is more important than ever to have a well thought out plan. We think it is wise to invest in your future, by protecting it now. From our entire team, we thank you for the opportunity to serve you and to do this together.
We’re here for you
At Cox Insurance, our number one priority is customer service. Never hesitate to contact your advisor if you have a question about your policy or want advice regarding a claim.
Authored by: Taylor Cox, President
Cox Insurance provides Home, Auto, Liability and Commercial insurance that exceeds expectations. For a personalized quote, please contact us here.
