Reviewing Policies: Economic Impact Emphasizes Need for Insurance Planning

The insurance industry hasn’t been spared from the many changes that the current economic environment is throwing our way. Insurance professionals across Nebraska – and the country – are working with customers to find the best options and get the most out of their insurance selections. 

With inflation, insurance premiums on the rise, and specific questions surrounding what they need to feel adequately insured, customers of all kinds are doing research on policies. Insurance industry experts are well-versed in current insurance trends that are coming down the pipeline this year and are poised to answer questions about them.  

Home Insurance

With rising homeowners insurance premiums, many homeowners are questioning if their coverage matches what they are paying for. 

“Insurance is just trying to keep up with the increased building costs that are happening nationwide,” said Dustin Kowalewski, vice president at Chastain Otis. “Construction costs have changed so much, and a lot of people’s homes or commercial buildings are underinsured. So, we are seeing bigger rate increases. But with that comes more coverage. We want to make sure that people have enough coverage on their properties. When compared to national trends, however, Nebraska tends to be less extreme and more stable in the major swing of things.”

With more people working from home, insurance experts also report an increase in questions about how that impacts their home insurance policy. 

“With office equipment now present in residences and customers visiting personal properties, clients may need to review and update their policies,” said Heath Lichty, sales executive at FNIC. “Additionally, if clients have reduced their driving due to working from home, they may be eligible for discounts on their auto policy. As carriers rapidly adapt their coverage offerings, we believe it is crucial to have an open conversation with our clients about their changing insurance needs.”

Megan Hatch, commercial risk consultant from UNICO noted an area that needs more attention is home valuation. 

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“The insurance industry is in what we call a hard market, and thus the capacity of carriers has been reduced and the premiums have increased,” she said. “People are now looking for ways to manage the increase in cost and get more value-added services from their insurance brokers. The increase in inflation has impacted the cost to repair, replace or rebuild structures. As a result, one area we are seeing the impact is the need to increase the value of buildings, to ensure if there were to be a loss, adequate limits are in place to rebuild or repair.”

Life Insurance

Marlon Shkaidy, financial advisor at Mutual of Omaha Investor Services noted, that the majority of customers he has interacted with recently are looking for greater assurance that their policies will cover them in the event of an emergency or time of crisis. 

“The pandemic increased the urgency with which customers looked for insurance coverage,” he said. “Customers want to make sure existing coverage is adequate to create security and that policies will deliver as promised. 

“I predominantly sell life insurance, and the trends I have seen in Nebraska are toward a faster, simplified underwriting process, more adoption of doing business digitally, and a greater consumer interest in permanent life insurance over term insurance. During times of uncertainty, such as those faced during the COVID-19 pandemic, customers want to know if they are adequately insured, and they are looking for guidance in making insurance decisions – thus relying more and more on the expertise of insurance agents. Customers are also looking to understand insurance products in plain and simple terms to help them make sound decisions.”

Natural Disaster Coverage

Natural disasters continue to impact the world and Nebraska specifically saw several storms that prompted both home and business owners to determine if their policies will cover damages. 

“Unfortunately, Nebraska was struck by multiple strong storms last year, resulting in losses exceeding $2 billion,” Lichty said. “As a result, several of our carriers have found it challenging to operate in the state, and we have observed frequent changes to rates, coverage, and deductibles as companies try to improve their position. Our clients are understandably concerned and have been asking many questions about how their policies are being affected. They want to know if it’s time to switch to a different company that offers a more competitive price.”

Lichty noted that the insurance industry was also hit with a wave of unexpected events that impacted rates. 

“Several carriers faced unprecedented losses due to severe storms occurring simultaneously with a surge in building supply prices,” he said. “As a result, carriers are now providing substantial inflation adjustments to home policies to ensure adequate coverage for consumers. These inflation adjustments can be as high as 20%, which is one of the primary reasons for the rise in home insurance premiums.”

Health Care

Finding the right health insurance plan is always a big decision that requires a lot of research and forethought. Whether you are the employer coming up with specific health care options for your employees in 2023, or you’re the employee looking to find which one offers the best coverage for you and your family, health plan selections take time. Rising deductibles and premiums are also a big factor, both for businesses and their employees. 

Howard Shandell, president of Midwest Benefit Advisors, recommended that employers rethink how they have always offered benefits, but at the same time, focus their attention on communicating well and offering opportunities for employees to ask questions. 

“People are looking for guidance and are trying to find a sustainable health care plan that won’t bankrupt them,” he shared. “I tell people to look outside the status quo. 

“The benefits that they’ve been offering for 20 or 30 years aren’t the same and I think the employers that are having success are the ones that are embracing what we call ‘next-generation strategies.’ Also, I think it’s important that employers have year-round communication and engagement programs. When you’re spending so much money on that benefit, it’s critically important to talk about benefits throughout the year rather than just once a year.”

Shkaidy agreed, sharing that communication and education go hand in hand. 

“In my experience, as long as employers offer good insurance options, the attraction and retention of employees comes down to how well they understand their insurance benefit,” he said. “I would encourage employers to spend time educating their employees on how their insurance works and what it covers, not only that it is offered.”

Planning is Key

To combat rising costs due to inflation and prepare for what other changes may come in 2023 and beyond, it is important to stay on top of current trends and plan for insurance coverage that protects you in an unforeseen circumstance. 

“Trends we can expect to continue to see are increases in premiums across all lines of insurance, anywhere from 3%-25%, with the exception of workers’ compensation, which in some cases we are seeing a decrease,” Hatch said. “In working with business owners, we see many people wanting to better understand what they are paying for and what their insurance covers. Businesses across all industries are feeling the effects of the pandemic, which include labor shortages, supply chain disruptions and social inflation. People are looking for ways to not only manage their risk but manage their insurance costs.”

Reviewing policies will help identify any areas in policies needing updates.

“Inflation, much like COVID-19, has created tremendous strain on consumers. This strain translates to customers thinking more deeply about their financial position and the need to insure what they have worked so hard to create,” Shkaidy said. “Customers are even more determined to hold onto or acquire adequate insurance coverage. The most important piece of advice is to avoid a ‘set it and forget it’ mindset to insurance. It’s important to review your coverage on an annual basis and seek out expert advice when making insurance decisions. The best time to do insurance planning is before you need it.”