Brooks Berry sells insurance for a living, so he knew it would cost more to insure his home when he moved to Mount Pleasant about a year ago from Charlottesville, Va.
Even so, the vibration of the stickers was, in a word, amazing.
“It was a huge increase,” said Berry, a customer service consultant Mappus Insurance Agency. “Going from a $1,500 plan to a $4,500 plan — that was a big hurdle.”
Consumers across South Carolina, especially along the coast, are facing significant increases in their home and auto insurance premiums, with rising rates cited as a major problem.
A recent J.D. Power report shows traffic is up nearly 12 percent nationwide in the second quarter of this year, with the largest increase seen in the Southeast. The increase in homeowner’s premiums is even higher — up to 30 percent, according to S&P Global Market Intelligence.
Berry said she has seen an increase in consumers at her Mount Pleasant agency who are dealing with high prices and trying to find a way to lower their costs. They can often help with shopping, but prices seem to be rising everywhere.
“I think that insurance will be more expensive, because of the climate that we live near water and the natural disasters that are happening around the world that affect reinsurance,” said Berry. “This will probably be new.”
Inflation has started
Rising prices for gas, food and other everyday items are easy on consumers, and business owners see the impact of rising labor costs all the time. But the high cost of insurance – which is usually paid once or twice a year – seems to be on the rise. It is the everyday currency, however, that is burning premium.
“Part of what insurance pays for is labor and materials that rebuild the insured’s home, and those costs have gone up,” said Russ Dubisky, CEO. South Carolina Insurance Association. “Auto parts, shingles, shingles – all these things increase the cost of insurance.”
The closed-end sales process is also in effect, delaying product delivery and forcing insurers to pay more for a home extension or car loan when a customer’s property is damaged.
“Some car insurers have experienced a rise in the number of claims and the cost of repairing cars,” said Michael Wise, managing director of the motoring regulator. State Insurance Department. “These things have caused insurance premiums to increase.”
For homeowners, rising property prices force them to buy extras. A house that may have been rebuilt for $200,000 a few years ago, for example, may cost $250,000 or more, and insurance companies may not be willing to cover the house for less than its value. A 25 percent increase in mortgage payments is reflected in payments, many of which are paid through the mortgage company’s checking account, and this has led to higher monthly payments.
“It’s not an incremental increase, per se, because you’re buying more,” Dubisky said. “If it costs more to repair or replace, it’s passed on to the consumer.”
The story is the same with cars. A study by the US Bureau of Labor Statistics shows that the average price of used cars and trucks increased by 40.5 percent between January 2021 and January 2022.
Even drivers with a spotless driving record pay more. The increase “has nothing to do with you, or your driving,” insurance company Geico said. “It’s very common and happens when inflation occurs, or when the cost of car repairs and medical expenses increases throughout the area you live in.”
Inflation isn’t the only reason prices are rising.
Climate change has increased the length and severity of hurricane seasons and wildfires in the US, insurance claims in 2021, according to a report on the website Policygenius. There were 97 natural disasters nationwide that resulted in $92 billion in insured losses in 2021, according to data from the Insurance Information Institute. That’s up from 92 events that lost $81 billion last year.
Homeowners are also seeing an increase as some of South Carolina’s largest insurers are leaving the state — and vulnerable coastal areas — behind.
“There’s less competition, and that’s driven prices up,” said Berry, the Mount Pleasant agent.
For example, United Property and Casualty was the 11th largest provider of homeowner coverage in 2021, according to the Department of Insurance, with nearly 31,000 policies representing $42.1 million in claims. Late last year, UPC agreed to sell its business in the Carolinas to Florida startup TypTap, which calls itself a “fast-growing, technology-driven insurance company” that relies heavily on algorithms and artificial intelligence to generate pricing.
Former UPC points began migrating to TypTap in June, and some South Carolina consumers are seeing their payments double.
Wise, the state’s insurance regulator, said the UPC-TypTap deal helped consumers in one way, because it provided guaranteed support for the transition.
In some cases, insurers have left South Carolina consumers unprepared.
This was the case in June when Florida-based Southern Fidelity Insurance was deemed insolvent, forcing nearly 25,000 Palmetto State homeowners to obtain new insurance within 30 days just weeks into the hurricane season.
“Although some people are being told that their coverage is no longer available with a certain company, we have recently spoken with agents who have obtained other insurance to get them back,” said Dubiksy and the insurance agency. The new insurers, he said, often charge higher rates and there is a “compulsion to buy additional coverage, which makes it more expensive.”
Even when faced with high prices, consumers can find ways to save.
One of the fastest growing technologies is the use of telematics that can monitor a vehicle’s operation, usually by connecting the device to an on-board diagnostic port. Transunion’s research found that the number of customers offering a policy that such a device could help determine their prices increased from 32 percent to 40 percent between the first quarters of 2021 and 2022. The number of buyers who chose it increased from 49 percent to 65 percent .
“Clearly, consumers are becoming increasingly concerned about surveillance,” the report said.
Combining different types of policies, such as home and auto, with one insurance policy can cut between 15 percent and 30 percent off the bill, Policygenius says.
Choosing a higher deductible — for example, $1,500 instead of $500 — can also lower premiums.
“If the replacement cost of your home goes up by $50,000 but you’re carrying a $500 deductible, you’re transferring more risk to the insurance company,” Berry said, adding that the added risk translates into higher premiums.
Customers should also ask insurers what their deductibles are. Security measures, smart home devices, new roofs and other preventative measures can lower prices.
Wise said the best advice he can give is to “shop around to find the best insurance” for a client’s needs and wallet.
Policygenius said landlords “must make an effort buy their home insurance as well every year to make sure they don’t miss out on cheaper or better deals with other sponsors.”