Recent trends in P&C insurance have prompted a shift in mindset that might require a second look at how we prepare for the unexpected. Our industry is undergoing an unprecedented time, with companies raising rates and changing deductibles at renewals.

Understanding the Shift

The insurance industry is in a state of flux, influenced by several factors:

• Extreme Weather: The increasing occurrence of extreme weather claims has led insurers to recalibrate risk assessments, often resulting in higher premiums and deductibles.

• Rising Costs: As inflation increases, so does the cost to rebuild or repair homes. Therefore, insurance premiums must rise in order to match the cost to rebuild.

• Stringent Guidelines: With all these changes, insurance carriers are becoming more and more stringent with what they will and will not write.

These factors contribute to a landscape where traditional insurance models are being challenged, and policyholders may face higher out-of-pocket costs.

The Case for Larger Deductible Reserves

The #1 solution to higher insurance rates is a higher deductible. With our client’s best interest in mind, we would advise financial planners to recommend their clients set aside larger reserves specifically for insurance deductibles. This approach ensures that individuals are not just prepared for the deductible itself but are also cushioned against any additional financial strain that an unexpected event might bring.

Side note: if your client’s home deductible is $2,500, it may behoove them to have upwards of $5,000 set aside because our recommendation would to be weary of filing a claim right now for something that isn’t a substantial loss because carriers are being very quick to non-renew and cancel policies after a claim is filed.

Collaborating for a Resilient Future

At Holt Insurance Agency, we understand the importance of adapting to these changes. We are committed to providing our partners and clients with the resources and support needed to navigate this new normal confidently. Our goal is to collaborate closely with financial professionals to ensure that together, we can secure a resilient financial future for those we serve.

As a partner with Holt Insurance Agency, we promise to review any personal insurance policy that your client may have in a low pressure situation in order to see what options they may have and how increasing their deductibles may influence their premium. Let us know if you have a client that would benefit from this review and we’d be happy to help out!