As we navigate 2024, the personal insurance market continues to evolve, shaped by economic pressures, natural disasters, and technological advancements. In this post, we’ll provide a comprehensive overview of the current state of the market and offer specific insights for our clients in Texas and across the country.
Texas is experiencing unique challenges and opportunities in the personal insurance market:
Texas is one of the top four states in the U.S. for luxury thefts, including high-value items like jewelry and luxury handbags. This has contributed to increased premiums for valuable personal property coverage.
The state has seen an uptick in litigation, particularly related to auto insurance claims. The “us vs. them” theory, where larger awards are encouraged by socioeconomic divides, is prevalent in Texas, leading to higher costs for insurers and, subsequently, for policyholders.
Due to the rising risks and costs, some insurers are reassessing their presence in Texas. This includes adjusting premiums and, in some cases, reducing the number of policies they are willing to underwrite in the state. It’s crucial for Texas residents to review their policies regularly and ensure they have adequate coverage.
Looking outside of Texas, California’s insurance market has been heavily impacted by the lingering effects of the pandemic and other environmental factors. The freeze on rate increases during the pandemic has led to insufficient premium levels, causing strain on insurers. Wildfires, inflation, and rising reinsurance costs have further exacerbated the situation. Recent regulatory changes aim to streamline rate reviews and allow the use of catastrophe modeling, potentially easing some of these pressures. However, many insurers are reducing their presence, with major players like State Farm not renewing a significant number of policies.
Florida is also experiencing a severe insurance crisis, particularly in the homeowners’ sector. The average annual home insurance rate is expected to rise significantly, driven by high litigation rates and fraudulent roofing schemes. Insurers face substantial challenges from both state regulations and frequent natural disasters. Measures like the Citizens Policyholder Surcharge and Emergency Assessment can add up to a 25% increase in premiums during deficit periods. Additionally, high fees charged by affiliated companies are draining resources from insurers, leading to further market instability.
US Home Insurance rates have increased by an average of 20% since the start of 2023 and are expected to continue to rise. In California, State Farm is currently asking regulators for a 30% increase on top of the 21% increase that was recently approved.
The cost of home insurance continues to rise due to increasing material costs (e.g., 12%+ for concrete products, 5% for windows and doors, and 7% for paint) and labor shortages driving up wages. The trend of homeowners remodeling their homes adds another layer of complexity, affecting rates and eligibility.
Insurance companies are increasingly using data analytics, predictive modeling, and telematics to assess risk and set premiums. These technologies allow for more precise underwriting and personalized insurance products. However, they also raise concerns about privacy and data security, especially with the rising need for cyber coverage.
The auto insurance market faces its own set of challenges, including rising repair costs for green/hybrid cars and increased theft rates. Inflation in parts and labor, supply chain issues, and the higher cost of rental cars have all contributed to higher premiums. Additionally, drivers with poor credit pay significantly more for car insurance, highlighting the importance of maintaining good credit.
We’ve seen a notable increase in crimes targeting valuables like jewelry, luxury handbags, and collectible items. Social inflation, driven by increased litigation and broader definitions of liability, is pushing up costs for umbrella policies. Insurers are seeing larger compensatory awards by juries, which in turn affects premium rates.
The personal insurance market is complex and always changing. It’s important to stay up to date on the trends and changes, and when you work with Endeavor Advisors, we’ve got you covered.
Regular policy reviews can identify any impacts on your coverage and premiums. Since the insurance industry is state-regulated, processes and approvals will vary and could cause some instability. There might be insurance options that leverage telematics or usage-based insurance that could provide more personalized coverage and potentially lower premiums based on your specific risk profile. We have these conversations every day at Endeavor as we work with each client to make sure they have the coverage they need: nothing more, nothing less.
At Endeavor Advisors, we integrate risk management into our planning discussions, ensuring our clients have regular reviews of their personal insurance needs. We complete an annual check-in to help keep coverage aligned with your financial goals. For over 20 years, we have built relationships with trusted insurance agents and brokers who can offer our clients a range of options for their personal insurance needs. We can make a seamless introduction to partners who can significantly enhance your satisfaction and protection.
It’s clear to see that the personal insurance market in 2024 is marked by constant change and a lot to keep up with. Clients face increased risks and new threats, making the role of a knowledgeable advisor more important than ever. By staying informed and proactive, we can help clients navigate these challenges and ensure their present and future are well-protected.
Feel free to reach out for further discussions on how to adapt to these market changes and protect your assets effectively.
