Homeowners Insurance Rates are Increasing

We are seeing rate increases from all insurance carriers in the Northwest for homeowners insurance. For years this category of insurance has been relatively stable and in some limited cases we saw rate reductions during the recession and soft insurance market.

Now we are witnessing the change in the marketplace to a hard market where excess capacity has been absorbed by insurance carriers and extraordinary natural disasters in 2011 nationwide that have forced insurance carriers to revise their rates by state. The Northwest is among the states with generally lower rate increases with the gulf coast and south eastern seaboard seeing the largest increases.

What this means for those of us in the Northwest  is there will be rate increases for homeowners insurance for the next several years as carriers adjust their rating models to compensate for higher than normal claims through increased natural disasters, thefts and vacancies.

As an agent I don’t advocate these rate increases and I do not have any control over them. I know they are coming and I want to prepare my clients with this information. It is important to make certain that each home is adequately covered however there are options that we can use to control insurance costs chiefly by considering a higher deductible. This is not for everyone but if you can afford to pay the first $1,000 of a loss or even $2,500 you can lower your insurance premium.

Now is a great time to meet with your insurance agent before your next renewal to discuss your coverage and insurance options.

Are Health Care Costs Slowing?

In a recent article by Lisa Gillespie in Employers Benefit News it was noted that health care costs were projected to increase less than 10% for the first time in the last 10 years! Costs for all types of medical plans on average are expected to increase only 9.9% for 2012!

One of the trends that I am seeing that lends to the article’s premise is the market is trading down in coverage. Insurance carriers are offering less rich benefit plans and more catastrophic plans to match the needs of individuals and group. Since most business groups and individuals have not seen their income increase to match the rate of health care costs they are more often than not struggling to keep coverage for their employees and for themselves as individuals. This has led to larger deductibles, larger copay and greater coinsurance requirements. We are seeing more restrictions on prescriptions namely forcing the use of generics instead of name brands and limits on visits to doctor’s offices. Ultimately, everyone who purchases health insurance either individually or through an employer bears the additional costs and that is not reflected in the lower increase in health care costs specified by the industry. So, are health care costs really slowing or is the consumer bearing a larger portion of the costs not reflected in the study?

Here's to Higher Limits!

During a recession everyone thinks about cutting back whether it is how much you spend on telephone, your cable bill, dinner out and of course insurance.  The TV ads tout that you can name your price and they will find coverage for you that will fit your price. What isn’t obvious is to get your price the insurance company is lowering your auto liability limits. Even if you haven’t subscribed to lowering your auto liability limits it would probably never occur to you to increase your limits for savings!

In insurance – just like real life, during a recession everything seems to cost more just when available cash on hand is getting tighter. If all costs are rising it also means cost to settle claims for losses and injuries are rising also.

If you are a good driver, have a clean record and good credit it may only cost you a few more dollars to increase your liability limits to the next level. For some it may not cost you anything and for a few it can actually save you money! Think of it as buying a loaf of bread and getting another for free. You are used to paying for one loaf and you notice that the loaf has increased in price. However, the store has an offer of buy one and get one free – now the cost of the one loaf doesn’t seem so bad. With auto insurance you are not really buying liability and getting more liability free but you can double your coverage and pay at a reduced rate which is some cases may be no more than what you are paying currently.

This opportunity is not something that you will see advertised but is certainly worth checking out. Talk to your agent and find out what it would cost to increase your limits and let me know your success.

The Coming Health Care Crash

With all of the conversation regarding health care reform and regardless which political party that you support health care and the insurance system that supports it in this nation is broken. While the inefficiencies in the current system continue to grow and more and more of the public fall in to the uninsured rolls we still have not reached the tipping point as a nation to proactively find a solution. Health care costs continue to grow each year faster than the rate of inflation and will continue as more of the boomer generation get older and use their health benefits. As an older segment of the US population depends on Group Health Plans, Individual Health Plans, Medicare and Medicaid we are seeing similarities in the insurance pool which also serves to drive up costs. Remember, insurance is all about spreading the risk so without the younger healthier members of society to drive the price down we will see premium rates grow at an ever faster rate. The boomers are only a part of the cause, as a public we are overweight, out of shape and taking medications more than ever – this is also driving up health care costs.

When the uninsured receive health care and pay little or nothing for the service those costs are being borne by the public who do carry insurance. You are paying the cost with every doctor’s visit, medical procedure and hospital stay. And, it is a self fulfilling prophecy because as more of the public become uninsured your share of the costs grow putting extraordinary pressure on the middle class.

When enough of the middle class can no longer support health care and maintain their family budgets we will see a crash similar to the financial markets and maybe that is not a bad thing. The short term fixes being proposed by both parties are akin to placing a Band-Aid on an amputation. It looks like something is being done but does not stop the hemorrhage. The United States only seems to make grand and sweeping changes when faced with no other choice. We need a grand and sweeping change to how we provide health care insurance in this nation and the political will from both parties and the American Public to see it through. I know that wishing doesn’t make it so and regret the lost opportunity now to have a national dialog on health care and a health insurance but realize that there is a process to all things and we are in a process with health insurance.

In the mean time and until the crash occurs I encourage all of my clients to not drop health insurance. Should you become sick or injured the financial repercussions can extend beyond your lives to impact your extended families. Everyone should have at least a catastrophic hospitalization policy. Now is the time to talk to your insurance agent to look at all of your options and keep insurance costs at a minimum.