Insurance Prices Rising Fast, Unlikely to Stop Anytime Soon

By:
Chris Gaetano
Published Date:
Feb 12, 2020
Insurance prices are rising fast in all sectors as providers struggle to contain costs, which have begun eating into business profits, according to the Wall Street Journal

Last year alone saw several major increases: third quarter 2019 saw an average price increase of 7.6 percent, the second quarter had a 7.4 percent increase, and the  first quarter  had a 5.1 percent increase. Contrast this to 2017: prices in the first, second, third and forth quarters increased by 1.6 percent, 1.9 percent, 2 percent, and 3 percent respectively. The last time rates grew so fast was 2003. 

The Journal said that insurance providers have been challenged by years of historically low interest rates, which have blunted the investment income many insurers need to pay out claims. At the same time, the number of catastrophic events that sparked claims, such as hurricanes and wildfires, have also increased, driving up costs. These events, while not posing an existential threat to the insurance providers' ability to pay out claims, have eaten into their ability to make a profit. Hence, the rising prices. 

The increases meant to prop up insurance industry profits, however, have caused trouble for other businesses, which must pay the fees. The Journal noted that one Texas nonprofit's insurance costs went from $176,000 to $750,000 in a single year. 

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