The latest US Consumer Price reports for August revealed that some prices are rising again, despite the ongoing decline of core inflation. A notable example is Auto Insurance, which saw its highest annual increase in almost half a century. Businesses should be aware of these rising costs and plan accordingly for the next year.
2023 has proven to be a tough year when it comes to insurance rates as a variety of different factors are pushing costs higher in several different areas. There are several factors that are causing insurance rates to rise, some of which are impacting other business operations as well.
Examples include increasing Extreme weather events that result from climate change and increase the frequency and severity of natural disasters, such as floods, wildfires, hurricanes, or earthquakes. These events cause more property damage and liability claims for insurers, who must pay more to cover the losses and rebuild the affected areas.
Inflation affects the insurance industry by increasing the cost of claims and the cost of reinsurance, which is the insurance that insurers buy from other insurers to spread their risk.
Finally, supply chain disruptions affect the insurance industry by increasing the cost of repairs and replacements for damaged or lost property, such as cars, equipment, or inventory.
Being proactive by reaching out to your insurance agent to discuss trends and how it may impact your business costs moving forward can give you time to plan ahead in this situation and be better prepared for a strong 2024.
