A new year is upon us and while only two months into 2022, consumers are seeing higher costs in many things including home and auto insurance premiums.

The economy is changing and as it does, it affects auto and homeowners insurance premiums in multiple ways.

Why are premiums rising?

Here are the main, collective reasons why insurance agents and their many clients are seeing elevating premium rates and what to expect throughout the year.

1. Insurance Companies Are Seeing Higher Losses

The more obvious reason why home and auto insurance premiums are rising is that insurance companies are paying out more and higher claims than ever before:

More Home Damage Claims - With hurricanes, fires, and tornadoes affecting so many people over the past few years, homeowners insurance claims for extensive damage have skyrocketed.
More Car Accident Claims - Since the start of the COVID-19 pandemic, collected data indicates a nearly 20% increase in fatal car accidents and a significant rise in speeding-related accidents, all of which account for more accident claims and higher claims paid out by insurance companies.
Higher Repair and Replacement Costs - Due to supply chain problems, increased production costs, and other cost increases, insurance agencies are paying significantly more to repair and replace insured property.

2. Supply Chain And Skilled Labor Problems Are Affecting Everything

What began as supply chain issues due to the pandemic has continued as a lack of resources and products everywhere, affecting many different industries.

A smaller supply of building materials, auto parts, and other supplies mean higher demand for those products and a higher cost for them as a result.

A lack of skilled labor to make products, provide services, and do repairs only contributes to the supply chain issue.

Auto and homeowners insurance companies across the board are simply paying more for the parts and supplies required to fulfill insurance claims.

These products will continue to rise in price until supply chain issues are resolved and to a more normal status.

3. Inflation Just Makes It All Worse

Inflation centered around other economic issues including oil prices, dollar value, and other factors are yet one more reason why everyone, including insurance agencies, is paying more for less.

When inflation is up, so is the cost of home and auto insurance, since every damage claim costs more to cover.

Expect Higher Insurance Premiums in 2022

What does it all mean?

According to insurance industry forecasters, drivers will see their auto insurance premiums rising if they have not already and the same for homeowners.

Auto and homeowners insurance policies may offer fewer or smaller discounts as well.

Generally speaking, insurance agents are seeing across-the-board policy increases for the simple reason that everything costs more right now, including labor.

As long as inflation remains high and supply chain bottlenecks continue to affect production and materials sourcing, the insurance industry as well as most others predict increases throughout 2022.

Hopefully, the solutions to the problems causing these elevated insurance costs are right around the corner and the increases in auto and home premiums will end soon.