How Inflation is Affecting YOUR Insurance Premiums

According to an article from MarshBerry, U.S. Inflation rose 8.6% in May from a year ago and represented the highest increase since December 1981. Economists expected an increase of 8.3% in May, but surging food, gas and energy prices all contributed to the higher-than-predicted rise in inflation.

On June 15, the Federal Reserve (Fed) announced it was raising the federal funds rate ¾ points to a target range of 1.5-1.75% in an effort to combat rising inflation. This is the first time the Fed has raised the target range by ¾ of a percent since 1994 and was higher than the half percentage point increase they previously hinted at.

Is the Fed understating the underlying numbers?
While the headline of “highest inflation rate in 40 years” dominates the news, there were even stronger price increases in many of the categories within the Consumer Price Index (CPI) that paint a more troubling picture for consumers. Here are some key categories experiencing higher than average, year-over-year increases:
– Food: 10.1%
– Gas: 48.7%
– Fuel oil: 106.7%
– Electricity: 12.0%
– New vehicles: 12.6%
– Airline fare: 37.8%

The impact on insurance premiums.
The rising costs of household goods and commodities aren’t the only pain points for individuals and small businesses. The Council of Insurance Agents & Brokers’ (CIAB) Commercial Property/Casualty’s 1Q2022 market report showed that insurance premiums rose for the 18th consecutive quarter. While 6.6% was the average increase in commercial premiums in 1Q2022 for all account sizes, there were some lines that saw significant increases. Here are some notable 1Q2022 increases on specific insurance categories:
– Commercial cyber: 27.5%
– Umbrella: 10.5%
– Commercial property: 8.6%
– Commercial auto: 5.9%

According to MarketScout data, personal lines insurance premiums rose:
– Homeowners (home valued over $1M): 7.0%2
– Homeowners (home valued under $1M): 5.3%2

The Starr Group is being proactive with solutions by communicating about price increases and researching multiple carriers in order to find the best rates for our customers.

Call our office today to learn what we can do to stabilize the cost of your insurance premiums. 1-414-421-3800