Why are my Insurance Rates Going Up and What Can I Do About It?

If you’ve recently looked at your Auto and Home Insurance policy renewals, you likely have seen a large increase in your premium, even if you did not had any claims.  I have been spending a lot of time in recent months talking to current and prospective clients on what is causing these increases and more importantly, what can they do about them.  My name is Jason Newell, and I am the managing partner at 303 Insurance Brokers and I’d like to share with you what we’re seeing in the Colorado insurance market today. 

What is causing these large increases in the insurance industry?  First, it’s important to remember that insurance is set up as a shared risk model.  This means that when there is a large amount of claims activity, everyone is likely to be impacted through increases in their premium.  I often explain the impact of claims is like throwing a pebble in water, the ripples are larger closer to where the pebble impacted the water and smaller as they disperse.  Our rates in Colorado are more directly impacted with an event like the Marshall Fire than a fire in California or a hurricane in Florida, but all 3 will cause some impact to our rates.  

Insurance companies use historical loss data from the last 10-20 years to help them project future loss models.  They then collect premiums to cover their overhead expenses and to pay for the projected claims for the year.  In 2021 and 2022, the amount of money paid out in claims far exceeded what insurance companies collected in premiums.  This was due to the increased cost of materials due to supply chain issues and labor. This combined with significant events like the Marshall Fire and the Denver Metro area becoming the nation leader in auto theft, has caused insurance companies to raise premiums at an unprecedented rate to recoup prior claim payouts.  They are also collecting more premiums to be better prepared for future claims.  One of my biggest carriers has increased their dwelling coverage for homes 17% to make sure they are keeping up with inflation.

What can you do to control your insurance rates?   The best thing you can do is to shop your insurance.  At the same time, shopping for insurance will take time, time that many people do not have.  There are 3 main ways to shop for new insurance: direct to consumer (internet shopping), captive insurance agents (like State Farm, Farmers, All State, etc.) and independent brokers who can shop multiple carriers at once.  

The direct-to-consumer model allows the convenience of shopping for insurance 24/7.  The downside is you don’t have the assistance of a knowledgeable agent to help explain the best coverages for you.  This often leaves customers without some of the coverages they expect, want or need.  Captive carriers often are the biggest names in insurance that you recognize from their large advertisement campaigns.  Even if they can offer the best rates now, they may not at renewal.  This forces you, the client, to reshop your insurance every year, year after year. 

At 303 Insurance Brokers, we are a Colorado local independent insurance broker that simultaneously shops multiple national carriers for all our clients to help ensure they are getting the best value for their insurance dollar.  At 303 Insurance, value is the intersection of price and coverage.  Not only can we help you get the best price today, we reshop your policies for you going forward if needed, saving you both time and money.  If you are interested in an insurance review, please visit our website www.303insurancebrokers.com or reach out to me at 303-506-2755 or jason@my303isnruance.com.