The insurance industry is currently facing a challenge that is affecting both insurance agencies and their clients – higher insurance premiums. While it is not unusual for insurance premiums to increase from time to time, the current rate of increase is significantly higher than what is typical. Several factors have contributed to this trend, including ongoing inflation, increased natural disasters, and technical distractions.
What Can We Expect
The US Bureau of Labor Statistics (BLS) reported that the consumer price index (CPI) rose by 6% year-over-year in February. Although this was slightly lower than January’s rate of 6.4%, it was the eighth consecutive month of increase, and the housing market accounted for 70% of the month’s CPI gains.
The new term “supercore inflation” describes the measuring of prices to better assess the financial situation. It focuses on common service prices. The supercore inflation increased slightly by 0.2% in February, which is 4% higher than one year ago. The Fed’s target is 2%. The significant contributors to supercore inflation were package delivery, pet-related services, hotels and motels, trash collection, laundry, dental services, and haircuts.
Since wages are usually what drives the cost of services, these rising costs could keep high inflation for months, resulting in the insurance industry’s higher premiums.
While a positive but declining inflation rate may seem like encouraging news, it is likely we will see an increase in interest rates. Staples & Associates is here to help keep our clients informed of any notable changes and we will help you navigate the current insurance market!