Fixing The Problem with Usage Based Auto Insurance  June 14th 2024

U.S. commercial insurance rates rose 6.3% in Q1

Growth in Q1 2024 remained on-trend with previous quarters, which have consistently seen around 6% price increases each quarter since the COVID pandemic.

Commercial lines insurance prices increased 6.3% year-over-year in the first quarter of 2024, according to Willis Towers Watson's (WTW) latest Commercial Lines Insurance Pricing Survey (CLIPS).

Data for the CLIPS is obtained directly from commercial lines carriers, with participants consisting of many of the top-10 commercial lines companies and top-25 U.S. insurance groups. The 43 participating insurers reportedly represent around 20% of the U.S. commercial insurance market, excluding state workers compensation. The survey compares prices charged during a quarter with prices charged in the corresponding quarter of the previous year.

Growth in Q1 2024 remained on-trend with previous quarters, which have consistently seen around 6% price increases each quarter since the COVID pandemic.

In a release, WTW offered a closer look at coverage statistics that stood out in their survey. One of these was excess umbrella liability coverage, which has reportedly seen significant price increases over the last few years. This line of business experienced its smallest growth in Q4 2022, compared to other recent quarters, but from early 2023 to present, prices for excess umbrella liability have climbed back to double-digit quarterly increases.

Thinking about skipping out on homeowners insurance? 4 reasons not to

As the cost of homeowners insurance goes up, the number of homeowners who are insured is going down. Currently "88% of homeowners are covered," a decline "from upwards of 95% just a few years ago," said Money, citing "the latest data from the Insurance Information Institute (III), an industry trade group."

It is understandable that some homeowners are arriving at this decision — there has been a "rapid pace of premium increases" in recent years, alongside "the typical inflationary pressures of late," said Money. And to be fair, in some instances, "insurers are pulling out of high-risk areas, leaving residents in a scramble to find replacement coverage."

But even with the pressures that paying for homeowners insurance can create, it's still not worth the financial gamble of going without.

Auto Insurance Costs Dip in May: Key Industry Reports Ahead

Is inflation trending lower? Yes. The Fed's preferred inflation gauge, the PCE Price Index, has fallen to 2.70% from a peak above 7% two years ago.[1] While still higher than the FOMC's 2% target, there's hope that slow progress on the inflation front over the back half of this year and through 2025 will occur, allowing Chair Powell and the Fed to begin cutting interest rates before too much longer.

That's been the zeitgeist, the proverbial carrot dangling in front of stock-market traders, for months. And that has, in part, fueled the rally in equities. It's not so much easing monetary policy itself, but the prospect of an easing policy rate that has promoted an underlying bullish tone across sectors. Outperforming GDP growth numbers over the second half of 2023 and robust corporate earnings results so far in 2024 have been positive catalysts too.

Angst with Auto Insurance Don't tell that to households struggling to keep pace with the cost of living, however. For those of us familiar with markets and macroeconomics, we know that prices writ large are not going to come down, but the pace of increase has dropped.