ALBANY — If you noticed your premiums for auto and homeowner insurance jumped hundreds of dollars over the last couple years, you’re not alone.
In the last two years, auto insurance premiums increased in New York state at least 6% and homeowner insurance at least 10%, according to the Professional Insurance Agents of New York State.
National surveys show annual rate increases are continuing this year compared with 2022, as auto insurance costs increased 18% according to the U.S. Bureau of Labor Statistics, while homeowner insurance premiums rose 7.1%, according to S & P Global Market Intelligence business service.
The typical household cost for New Yorkers is hard to figure. Premiums vary widely by the extent of coverage, a customer’s history of claims, the size of deductibles, and the value of cars and homes as well as where the consumer is located. But the industry and government regulators agree that New Yorkers are getting hit hard by these increases, which more than doubles typical annual increases in premiums.
Some tips for consumers
Consumer advocacy organization ValuePenguin, part of the LendingTree financial company, has some tips for consumers to deal with higher insurance rates:
- Seek other companies to get better rates. ValuePenguin found 76% of Americans who shopped for better quotes saved money.
- Seek discounts from companies by bundling auto, homeowner and life insurance coverage.
- Keep a clean driving record to reduce auto insurance premiums.
- Increase the deductible — the amount a policy holder would pay out of pocket for a claim — to reduce premiums, although that will mean paying more after a crash or home damage. A standard deductible for homeowner insurance in New York is $250.
“It’s absolutely true,” said Jason Bartow, vice president of the Professional Insurance Agents of New York State and executive vice president of Eugene A. Bartow Insurance Agency in Deer Park. “ … A lot of things happened in the last couple years.”
For both insurances, Long Islanders have long paid among the highest rates in the state because of high traffic volume as well as being vulnerable to coastal storms, analysts said.
But they say the factors driving recent homeowner insurance spikes include more frequent and severe storms nationally — in California, Texas and Florida, as well as in New York — that are being blamed on global warming. In addition, the cost of lumber and other supplies to rebuild or repair houses also has soared.
The agents association said storms have now been more accurately modeled by insurance companies, which is predicting that future storms will be more frequent and destructive. That is a factor in higher premiums for homeowner insurance around the country.
As for auto insurance, the high cost of high-tech gadgets on newer models, including cameras and increasingly sophisticated computers, means the cost of repairing vehicles after a crash has risen sharply. Analysts said a fender bender that could have cost a few hundred dollars a decade ago can now cost a few thousand dollars.
The higher costs also have reduced competition because fewer insurance companies are taking a chance to insure against storms and traffic accidents in New York, and particularly on Long Island. Less competition can result in higher premiums, analysts said.
In addition, the volatility of Wall Street, where insurance companies invest premiums, has contributed to higher insurance bills, Bartow said. When the yield on investments declines, insurance companies make up the shortfall in premiums.
In addition, he said, the “reinsurance industry” — which provides insurance companies with policies to cover big losses — is also raising prices to cover their potential exposure.
“Their job is to measure risk. Then if something happens, how much it is going to cost?” said Sen. Neil Breslin (D-Albany), the longtime chairman of the Senate’s insurance committee. He said states including New York, Florida, Texas and California “are having ‘thousand-year events’ once a year and … (insurance companies) are losing a lot of money.”
He said the powerful lobbying force of trial lawyers, who are increasingly hired to pursue lawsuits to collect damages in auto accidents, also are helping to force up premiums.
The state Department of Financial Services, which regulates the insurance industry, wouldn’t comment, but instead referred Newsday to data from the American Property Casualty Association.
The trade group said costs, including losses from auto crashes and inflation, increased costs four times faster than premiums rose, resulting in losses for insurance companies. As for property insurance, the association also cited inflation as a cause for increased premiums “while natural disaster losses continue to climb, resulting in the hardest market cycle in a generation.”
The financial services department’s website noted that a Climate Division was created in 2021 and is working with insurance companies about their “practices in assessing and managing climate-related financial risks” to in part more closely monitor costs passed along to consumers.
New York has ben seeing rate increases for a number of years. The most recent state analyses show that auto insurance rates for injury and liability coverage increased 6.3% from 2020 to 2021, and 12% from 2017 to 2021. For comprehensive auto insurance, which includes coverage for collisions not involving another vehicle, auto insurance increased 7.2% from 2020 to 2021 and 14% since 2017 statewide. Most consumers pay for both kinds of auto coverage.
New York homeowners statewide saw an increase of 6.5% in basic homeowner insurance from 2020 to 2021 and an increase of 17% from 2017 to 2021, according to the latest figures from the financial services department.
Although the industry is cyclical, analysts said no one is predicting when the rapid increases across all lines of insurance will ease.
Insurance companies “operate on frequency and severity of claims,” Bartow said. “And right now. there are a lot of them.”
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.