With all of the pressures on your already squeezed paychecks, insurers are worried that their profits will be impacted by the latest round of predictions that the economy is not recovery at the sped many had hoped, even anticipated it would. In the near-term, they worry about the lack of products they are selling to the housing industry (insurers protect everything in the process leading up to the sale and then insure the final product afterwards) and the number fo cancelled or un-renewed auto policies. This later is of great concern to the insurance industry as this trend points to more uninsured drivers on the road (Allstate suggests that as many as 4 million fewer policies are in effect since the downturn began in earnest two years ago).
According to Robert Riegel, ““With lower GDP you are going to get lower premium [volume], but the more important factor is just the pricing cycle, and that has been driving premiums down in addition to the weak economy over the last couple of years.” Mr. Riegel, who is managing director for Moody’s Rating Service U.S. Insurance Team worries that this will translate into higher premiums for those who are maintaining their insurance.
Insurance companies are not exactly strapped for cash at the moment. Their investments have done well with their annuity business continuing to improve. Although the five largest insurers have not had any enormous casualties so far this year, and the cost of the Toyota recall is being shared by the five largest companies, the projections do not bode well for the individual. Eventually, this will end up costing the consumer more, impacting an already strained paycheck that is barely making its obligations or retirement needs.
Companies have suggested that they will need to pick up their acquisitions in order to appease shareholders growth expectations. But the bottom line is that rates will have to go up. Well known is the rising cost of health insurance premiums, which continue to rise. less well known is the way insurance companies increase rates after an accident. If you have been hit in a car for instances, and you were not cited at the accident (tickets usually indicate who is at fault), your rates may go up based on prior driving records. because the insurance business is based on the potential risk, the number of accidents you have, even if they aren’t your fault, can increase your rates.
There are several things you can do however to help keep those costs down.
Increase your deductible. The higher the obligation you put on the insurer, the higher the premium. If you assume some of that through the promise to pay the first part of the costs, the lower your premiums will be. This will also give you pause when tempted to open a claim (a claim is often opened by an agent simply when you inquire about whether to or not – too many open claims can also increase your rates even if you went no further). If money is coming out of your pocket, you might as well pay it.
Take public transportation. The fewer times you drive your car, the lower your premiums. This also takes you off the road lessening your chances you will be hit by the increased number of uninsured motorists.
Maintain the upkeep on your home. You could probably trim those trees that look to be troublesome in the next wind/rain/snow storm before they land in your yard or on your house. Doing repairs when needed will also keep you from trying to use insurance to pay for damages that weren’t part of the problem.
Reexamine your insurance needs periodically. If you are able to bundle your insurance products, you will save. But try to stay with one insurer longer. Bundling can be costly if you simply pick up all of your policies and switch.
Each cost you can contain puts you in a better position to keep your retirement plan on track. And that is what we are all trying to do as we struggle with the day-to-day costs and finding some additional cash to invest towards the future.
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