Homeowners across the country have seen their insurance rates rise recently, but it’s not because companies are trying to make extra profit. In fact, since 2017, the homeowners insurance market has been profitable only once—and by a very slim margin. Most years, insurance companies have actually lost money. So, why do premiums keep going up? Simply put, insurers need to stay financially healthy to pay claims when disasters strike.
Troy Klingler, senior director of pricing at Central Insurance, explains that insurance works by pooling risk. Everyone pays into a shared pot, and when someone suffers a loss—like a car crash, house fire, or storm damage—the money comes from that collective fund. That means your premium isn’t just based on your own claims history. You’re also covering the costs faced by thousands of other policyholders. This is why even those without any claims can see their rates increase.
Several big factors push premiums higher. The rise in lawsuits and bigger settlements costs insurance companies more. Inflation makes building materials, labor, and repairs more expensive. Natural disasters like hurricanes and wildfires are happening more often and causing bigger losses. For example, in 2023, U.S. insurers paid over $99 billion due to natural catastrophes—one of the highest totals ever recorded.
Inflation hits insurers in many ways. Repairing cars costs more now, especially because of advanced technology in vehicles. Fixing what used to be minor damage can mean replacing costly sensors or cameras. Home repairs face similar issues, with labor shortages and higher material prices driving up costs. If your coverage limit doesn’t keep up with these rising expenses, you risk being underinsured.
Another important factor is reinsurance—insurance that protects insurance companies. Reinsurers help insurers cover huge disaster claims so they don’t go bankrupt. But as disaster losses have nearly doubled over the last decade, reinsurers have raised their prices. Those higher reinsurance costs get passed along to policyholders through premium increases.
Central Insurance seeks to spread these costs fairly. Risks vary by location, so increases aren’t the same for everyone. For example, homeowners in Texas face different natural disaster risks than those in Ohio, and premiums reflect that. The goal is to keep coverage sustainable and fair.
There are steps people can take to potentially lower their insurance costs. Practicing safe driving and enrolling teen drivers in defensive driving courses can help reduce car insurance rates. Protecting your property by moving vehicles into a garage during storms or using smart devices to detect water leaks can prevent damage and claims. Paying attention to weather alerts allows for timely action before severe weather hits. Regular home upkeep, like cleaning gutters and servicing HVAC systems, also helps avoid costly damage. Keeping an updated inventory of your valuables with photos and receipts makes claims easier and faster. Lastly, reviewing your coverage with an agent ensures your policy matches today’s repair and replacement costs.
Central highlights that while rising premiums can be frustrating, the increases reflect real-world challenges affecting insurance costs everywhere. They emphasize their commitment to fairness, transparency, and prompt service. Central holds an excellent financial rating and offers support to help prevent claims and handle them quickly when they occur.
If you’re wondering about your coverage or want advice on managing your insurance costs, it’s a good idea to talk with your agent. Understanding what drives premium changes and taking proactive steps can make a difference in protecting your home, car, and budget.