In the recent past, insurance rates have fluctuated, which is something that most people have noticed. According to the president of Insurance of America, Heath Ritenour, several factors determine the insurance prices. Having worked in the insurance industry for most of his years, he has enough knowledge from the experience he has gathered so far. Below is what he believes is the cause of fluctuation in insurance prices.
According to Heath Ritenour, the insurance guru, insurance companies earn from the money it makes from reserves. Such include premiums that customers pay that have not yet been issued in the form of claims. The law stipulates that insurance companies should not invest funds in the stock market but can do so in bonds. Investing in stock markets is uncertain since the rates keep changing.
There have been significant changes in the market lately, contributing to the rise of insurance premiums. Bermuda and London’s insurance markets have had significant increases in the claims made in the last year. That led them to avoid taking more risks, thus reducing the number of firms ready to share the risk in America.
When fewer companies share the risks, that means that each of them will have more risks and higher premiums. Natural calamities such as floods, hurricanes, and fires affect insurance firms because policyholders experience their effects. In 2020 alone, the United States got damages costing over 95 billion dollars from different natural disasters. Insurance companies had to compensate for the damages that consumers insured, which were more than the non-insured ones. Heath Ritenour explained that very few vehicle insurance firms are making money these days. Although an increase in the claims has caused that, expensive vehicle repairs are also the other factor. These days, auto repairs have become expensive regardless of the kind of accident they might have. Insurance expert Heath Ritenour notes that COVID-19 has affected many businesses, the insurance industry included. Therefore, he has taken the initiative to educate insurance companies and consumers on increasing premiums and shielding them from disasters and increases in liability.