5 Crucial Factors Driving the Surge in Insurance Premiums

As a customer, you may have noticed that your insurance premiums have been on the rise lately, whether for your car, home, or business. If you’re wondering what’s driving these increases, you’re not alone. There are several factors at play, and it’s important to understand them so that you can make informed decisions about your coverage and budget. 

1. Expensive Repairs and Rising Costs of Parts 

One of the primary factors contributing to higher insurance premiums is the increased cost of repairs. Due to global supply chain disruptions, the cost of vehicle parts has surged, making repairs more expensive than ever. For instance, newer cars often have advanced technology, such as sensors and cameras, which are costly to replace or repair. In some cases, even minor accidents can result in significant repair bills, which insurance companies must cover. This drives up the premiums they charge to offset the risk of having to pay for these expensive repairs. 

2. High Demand in Used Cars 

In addition to the cost of repairs, the used car market has experienced significant inflation in recent years. There’s been a surge in demand for pre-owned vehicles, driven by the shortage of new cars, which in turn has increased the cost of used vehicles. As a result, the value of your car – and others on the road – has risen, and so has the cost to repair or replace it in the event of a claim. Insurance companies adjust premiums based on the value of your vehicle, so with car values higher than before, premiums have followed suit. 

3. Compensation for Personal Injury Claims 

The increase in personal injury claims is another factor pushing up insurance premiums. The compensation for these claims has risen in line with inflation. As medical costs and the cost of living rise, so does the compensation awarded to those injured in accidents. For insurers, this means paying out more on claims, which results in higher premiums for policyholders. This is especially true in motor insurance, where claims for personal injury can be particularly costly. 

4. Unprofitable Insurance Market 

Another reason why insurance premiums are rising is that, in recent years, the insurance market has been largely unprofitable for many companies. Insurers rely on the premiums paid by customers to cover the costs of claims, administrative expenses, and to make a profit. However, in many sectors, including motor and property insurance, companies have been facing higher-than-expected claims and rising operational costs, all while the market itself has become more competitive. As a result, insurers have been forced to raise premiums to remain financially stable. 

5. Inflation and Economic Pressures 

General inflation is another factor that affects all areas of life, and insurance is no exception. As the economy continues to feel the effects of rising prices, the costs of claims, repairs, and even administrative expenses for insurance companies have increased. To compensate for these rising costs, insurers are adjusting their premiums accordingly. This is a trend that many customers are seeing across various types of insurance, from home and contents insurance to business insurance. 

How You Can Manage Your Insurance Premiums 

While these factors are largely out of your control, there are still ways you can manage and potentially reduce your insurance premiums: 

Talk to a broker: Let us shop around for you
Brokers are able to compare quotes from a variety of different providers to ensure you are getting the best deal 

Increase Your Excess
By increasing your excess (the amount you pay towards a claim), you can often lower your premium. Just be sure that you’re comfortable with the excess amount in the event of a claim. 

Improve Security and Risk Management
Adding security features like alarm systems, tracking devices for your car, or fire and burglar alarms in your home can reduce the likelihood of a claim and may lower your premium. 

Review Your Cover Regularly
As your circumstances change, make sure your coverage still meets your needs. For example, if your car’s value decreases or you’ve paid off your mortgage, you may be able to adjust your policy to reflect these changes and save on premiums. 

Consider Higher Excess
Choosing a higher deductible means you’ll pay more out-of-pocket in the event of a claim, but it can reduce your premium. Just ensure that you can afford the deductible if you need to make a claim. 

At KGJ , we understand the pressures of rising premiums for all insurance policies, and are here to help you navigate through it. If you’re concerned about your current cover or want to learn more about how we can help you save on insurance premiums, don’t hesitate to get in touch.  Contact us today for expert advice and a free consultation to review your policy and make sure you’re getting the cover you need at the best possible price.