Just last week, State Farm proposed a 22% increase to home insurance rates in California, citing damage from the LA wildfires. Rate increases, claim denials, and stricter underwriting are happening across the board in the insurance industry; it’s not just home policies that are being affected.
If you’re feeling the squeeze for any of your coverage types, you’re not alone. Right now, the insurance market is considered a “hard market.” For insurers and customers alike, hard markets are challenging to navigate. As insurance companies try to cover the rising cost of claims and the uptick in frequency, everyone’s wallets take a hit.
Hard markets are especially frustrating for people who haven’t filed any claims in recent years. In normal times, when you’re not filing claims, your insurance premiums will stay right around the same number. However, in the thick of a hard market, you’re likely to see rate hikes even if you’ve been a model policyholder.
Instead of sitting back and letting the hard market take you for a ride, now is the time to understand your options, secure proper coverage, and maybe even shop around for a new provider. At Nesbit Agencies, our top priority is keeping our clients safe, ensured, and happy. We’ll do our best to help you navigate this hard market and come out satisfied on the other side.
Why Now? The Hard Market Is Surging
Hard markets don’t happen in a vacuum. There are many factors at play that strain insurance ecosystem as a whole. Let’s take a look at a few:
· Increased Frequency and Severity of Claims: When more policyholders file claims, insurance companies foot the bill for the increase in payout costs. As those claims get more severe, the cost is driven up even further. In California, home insurers are managing thousands of total loss claims for people who lost their homes in the recent wildfires. That’s why we’re seeing major insurance companies push for higher premiums across the board.
· Reduced Investment Capital: Insurance companies rely on funds from investors, just like many other companies around the world. Right now, due to a mix of factors—geopolitical tensions, tariffs, and more—investors are keeping their pockets tighter, releasing smaller fund amounts to insurance companies. Without investor funding at play, the money has to come from somewhere else.
· Less Competition: We’ve all seen what happens when large conglomerates absorb smaller insurers. Less competition in the market makes it harder to find competitive rates and keep prices low.
Feeling The Pain Of A Hard Insurance Market
It’s overwhelming when your home, health, auto, and business insurance all get more expensive at the same time. Unfortunately, that’s the nature of a hard market. If you’re not already feeling the squeeze, you’re likely to experience one or more of the following:
· Higher premiums and overall costs associated with your policies.
· Less robust coverage. Insurers use lighter coverage options to help reduce prices and offer alternatives for customers who can no longer afford their original policies.
· Higher deductibles are likely as they help push some of the financial responsibility onto the policyholder.
· In the worst cases, policyholders may experience coverage denial. This means that they’re unable to get any coverage from a certain insurer, forcing them to seek other options or go without coverage at all.
In catastrophe-prone areas, some insurers are removing coverage options for those specific use cases. For instance, in Florida, it’s really challenging to get hurricane coverage; in California, fire coverage will be harder to come by; and in North Carolina, flood insurance is becoming less common.
Catastrophes don’t just impact home insurance, either. Auto insurance, business insurance, and even health insurance in those areas are likely to rise in lockstep.
6 Strategies To Use When Navigating The Hard Market
1. Bundle Your Policies
Most carriers offer multiple coverage types, allowing you to secure multiple policies with the same insurer. At Nesbit, we can bundle home and auto insurance together, which often leads to reduced costs and bundled pricing. This pricing model can help you keep costs low while maintaining your coverage.
2. Adjust Your Coverage
Look through the fine print of your current policies. Are there any areas where you can eliminate certain coverage or reduce your coverage limits? Making small coverage changes can result in big savings. You might be surprised at how effective this approach can be!
3. Focus On Risk Management
Ask your insurance advisor what you can do to manage the risk associated with your account. There are often safety measures or loss prevention strategies that you can implement in the background to secure a lower risk profile and obtain more favorable rates.
4. Stay Claim-Free
Even small claims can lead to price hikes. A minor scratch on your car or a broken window might not seem like a big deal, but they can be the cause of premium increases. Keep your claims to a minimum when possible.
5. Look For Discounts
You may remember hearing about safe driving discounts or even good grade discounts on popular insurance commercials, and those discounts still exist! With good credit, a good driving record, and a low claims rate, it’s likely that you’re eligible. Ask your insurance advisor about discounts as soon as you can.
6. Don’t Carrier Hop
Although it’s important to keep tabs on what your coverage looks like and make a change when necessary, try to avoid carrier hopping too much. Going from one carrier to another can be a red flag for some insurers, and during a hard market, they may be less likely to take on policyholders who are coming from another carrier.
When in doubt, talk to your insurance advisor. At the end of the day, we’re all people with homes, cars, and families, too. In the same way you need coverage to protect your family, we need it for ours, too. More than anything, we want to be able to give you peace of mind as you take on the world.
The Opposite Of Hard: Working With Nesbit Is Easy
In today’s challenging insurance market, having the right guidance makes all the difference. At Nesbit Agencies, we take the stress out of securing coverage by offering personalized solutions, expert risk management advice, and access to a diverse network of insurers.
With 17 Minnesota locations and national offices in Scottsdale, Arizona; Hudson, Wisconsin; and the Greater Charlotte area, North Carolina, we’re ready to assist you in finding the right coverage at the best possible rates.
Let’s work together to protect what matters most. Schedule your free insurance review today!
