Insurance costs and what it means to our clients

Education helps consumers understand the many influences of a hard market. What is a hard market? The hard market is the upswing in the insurance market cycle, when premiums increase, coverage terms are restricted, and capacity for most types of insurance decreases. Rates are increasing – coverages aren’t as good, non renewal notices are being issued and people are frustrated – why? There are a couple reasons. Extreme weather conditions in Colorado in particular are becoming more frequent. We no longer have a “fire season” rather 12 months of the year are now a fire risk. The intensity and frequency of storms involving hail has increased. It is getting harder to get underwriters to approve requests for homeowners insurance and underwriters are asking for more proof (e.g. more pictures of roofs and shingles etc.). The construction industry in the U.S. has been experiencing an extreme skilled labor shortage in the past couple of years. Due to the shortage, supply chain issues and other problems in the construction industry have arisen. 

We would like to point out however that the hard market in the insurance world is not only a result of severe weather conditions increasing in our state and labor shortages but more so of inflation. Gas prices have increased, interest rates have gone up, the cost of groceries have increased, and the cost of homes and vehicles has risen. Why would we assume insurance would not be affected by inflation like everything else? So as it stands the insurance industry is combating natural disasters in our state as well as inflation, labor shortages and rising material costs and trying to keep rates low. It’s not easy. Ideally we need our rates to coincide with normal inflation which in our office means anywhere between 0-12% increases. With inflation being how it is we are facing 100% increases. With many factors affecting the hard market, we do get asked a lot what we think is going to happen and if the hard market is going to improve. We hear you all and we understand your frustration. We are all facing tough times in all aspects of living. Although our weather exposure may not change, we personally think inflation WILL change for the better in the next 12-18 months. In our opinion, this is not the new norm.  We have hope that these times will change for consumers and we are not stuck in this hard market forever.  

Pikes Peak Insurance Agency understands and will stand with you through these hard times and do our best to protect what you value. Hope is on the horizon.