Insurance Rate Outlook for 2012
“Insurance rates are going up,” may be one of the most frequently-uttered phrase around office water coolers this month, coming in slightly after the previous weekend’s football scores, and talk of the most recent X Factor elimination. But are insurance rates really on the rise, and if they are, just how scary will the numbers look in 2012?
Let’s look at each of the three major types of insurance – auto, health, and home – in order.
Auto Insurance
Auto insurance generally has the most variance in rates, because so much of it is dependent on the number of drivers in a geographic area, as well as the average driving conditions. Every car insurer in a given state files their rate change requests separately, and then the state insurance commissioner’s office (or equivalent agency) approves or denies the requests.
For 2012, ICBC and Farmers are among those companies asking for rate increases in many states, including Colorado and Texas, but motorists in Massachusetts may see lower rates, now that the regulation against credit scoring in the auto insurance pricing process there has become an actual law.
During 2011, the trend was either very slow increases, or actual decreases in auto insurance rates, and there is no reason that this trend would not continue.
The best way to reduce the impact of any increased cost to your auto insurance, say the experts, is to ask for discounts if you don’t want to change your coverage, and shop online for a new policy if you do.
Health Insurance
Ever since the Health Care Reform Act was passed, people across the country have been concerned about an increase in health care costs. While it’s true that some corporations are changing their benefits packages to remove vision care (and similar options) from standard benefits, the cost increase to companies is actually the smallest it’s been in years – a mere 5.4% for those companies undertaking cost-cutting methods, and 7.1% for those that are not. Over the past two years, the average increase has been 9%.
However, it’s unlikely that most of those corporations will pass that lower increase to their employees, and workers in middle and lower salary ranges may soon see the increase in their benefits increasing at a greater pace than their wages will.
To help offset higher health insurance rates, industry analysts recommend Health Savings Accounts and wellness care, as well as only purchasing those types of coverage you actually need.
Homeowners Insurance
Hurricane Irene devastated much of the Eastern Seaboard this summer, and the mid-Atlantic states also saw a severe blizzard in October. Oklahoma is suffering from unexpected earthquake damage, and insurers in the southern coastal states, especially Florida and the Carolinas are reducing their exposure by non-renewing policies in beachfront areas, but how does all this impact the cost of homeowners insurance?
According to the Christian Science Monitor, we should expect higher homeowners insurance rates nearly everywhere. Indeed, State Farm has already filed for rate hikes in Texas, while Homewise has divested its interests in Florida.
Special Coverages
While not much is being said about special types of insurance, like flood and earthquake protection, the widespread flooding over the last two or three years and the high rate of earthquakes in places where they’re not expected to occur (Oklahoma, Virginia) may point to increased rates for these types of policies as well.
For every type of insurance, we recommend comparison shopping, buying online, bundling home and auto, and asking for any discounts that are available.
Says the Monitor: “Insurance companies’ profits this year are expected to be modest relative to the money they hold in reserve or investment accounts. They must invest safely, to protect against short-term swings in the financial markets. That limits their investment returns. To boost revenue, they must raise prices.”