New Report on pressure from rising home insurance prices across the United States.
Consumer Federation of America:
The costs of building materials and labor costs have gone up significantly in recent years, peaking during the COVID-19 pandemic.10 This factor has driven up housing costs generally, and has been a factor in insurance pricing as well. As homeowners insurance covers the “replacement value” of homes, meaning the cost to rebuild that property in case of damage, escalating rebuilding costs can drive up the
cost of coverage. While inflation has largely subsided and supply chains are not as badly disrupted as they were during the COVID pandemic, insurers continue to argue that rate increases are also attributable to overall inflation.
However, this is only part of the story. Climate change is
also an important driver of rising premiums. Due to climate change, the nation has experienced stronger and more frequent natural disasters, including larger and more powerful hurricanes, a longer and more destructive wildfire season, heavier rainstorms, tornadoes, hail, and other extreme events. While hurricanes and wildfires often attract the most attention, a rise in extreme weather events is impacting almost all parts of the country, including many states in the Midwest. These disasters not only increase costs but also lead to increasing expectations of loss, which drives up premiums as insurance companies attempt to better predict future events.11
In addition, the unregulated global reinsurance market has been increasing its prices. Reinsurance is insurance for insurance companies, where the insurers spread the risk around to guard against the potentially high cost of claims resulting from natural disasters. The reinsurance companies, many of which are based in Bermuda or Europe, are unregulated and wield substantial market power. They have
increased their U.S. prices for six straight years, which directly impacts the premiums paid by homeowners.12
One insurance that has been over looked is liability insurance. I have a million dollar umbrella liability policy. Last year it cost $350 and this year it increased to $1,150. I am thinking of going back to being self insured.