The Midwest continues to enjoy some of the most affordable insurance rates in the nation. There are many reasons for this, but one very important reason is what your insurance carrier is doing to avoid larger premium increases. In recent years, price increases have not only been driven by inflation but catastrophic events as well. In 2004, tornadoes accounted for more than 30 percent of all catastrophic losses. We are all aware of the rash of hurricanes in the Gulf in recent past. In 2007, flooding ravaged the Northeast, and in 2008, the Midwest and Plains states suffered their second 500-year flood in the last 15 years. Catastrophes are equal opportunity events.
With the large catastrophe payouts over the last few years, all insurance companies have faced higher reinsurance premiums (reinsurance companies collect a percentage of the premium taken in by your insurance company in return for guaranteeing portions of their claims. This reinsurance mechanism helps spread the effects of losses worldwide). With few places to go to pay for the increases in reinsurance costs, insurers will continue seeking modest premium increases.
Most insurance companies have been diligent about trimming overhead throughout the past couple of decades, and advances in automation have made the industry one of the most efficient in the financial sector. The unique, and hat some believe excessively strict, accounting standards required of the insurance industry have worked to make insurance one of the strongest of the financial sectors.
Companies continue to look for ways to trim costs without compromising quality. With all these efficiencies, our companies are still no more immune from the effects of inflation than any of us are individually. Their costs associated with auto and home repair or restoration, medical bills and other insurance-related expenses continue to climb, and the margins to absorb the increases have become very slim. As your agent, we are always ready and willing to work with you to determine the coverages and deductibles.