Only Slight Increase In Life Insurance
Insurers will remember 2007 with a smile. And it looks like consumers can expect to reap some of that good fortune in 2008. SR22 insurance prices could fall this year, after rising only 0.2 percent in 2007.
Homeowner's insurance premiums increased only 0.83 percent in 2007. While prices might not outpace inflation in 2008, underwriters will pay closer attention to the kind of coverage they'll provide. And life insurance prices will also increase only slightly, with premiums expected to rise in line with inflation, according to the Insurance Information Institute (III). Better deals await those who shop around, suggests the III.
"I don't ever recall seeing so many choices in how insurance can be bought," said senior vice president of auto insurance at Travelers Property Casualty Corp. in Hartford.
Computer-owning customers can begin shopping through the Internet. Many Web sites provide price quotes on sample auto and life insurance policies. And when it comes time to buy, the choices are equally varied. Independent and captive agents still sell more than half the insurance issued in the United States. Telemarketers also sell insurance. Shoppers can buy insurance via direct mail or the Internet. Banks sell insurance, as do affinity groups such as the American Association of Retired Persons and AAA, the motorists' club. Some employers even offer homeowner's or auto insurance through payroll deduction.
"Take advantage of this market. Shop around," agreed an economist with the Insurance Information Institute in New York.
Start with auto insurance. Since the beginning of this decade, an aging U.S. population has caused fewer accidents; insurers have paid lower claims per accident; safer cars have spared more drivers and passengers serious injuries; and insurers have competed fiercely for customers.
"Insurers have been pricing very aggressively to gain market share," said chief operating officer with the Middlesex Mutual Assurance Co. in Middletown. For insurers, profit margins for the safest drivers are razor thin. For the higher-risk drivers, insurers earn higher profit margins -- but even here, prices are succumbing to competition. "The success of the non-standard market (insurance for higher-risk drivers) has attracted a flood of new insurers into this market," he said.
Buying homeowner's insurance will be a little bit trickier in 2008, said, senior vice president of personal lines at Travelers Property Casualty Corp. While prices might not advance much in 2008, he said more insurers will begin to put caps on guaranteed replacement costs offered within the policies.
When insurers guarantee replacement cost of a home, homeowners can always count on full payment if an existing home is destroyed by a hurricane. This year many insurers -- including Allstate, State Farm, and Travelers -- will begin to ask customers to add more to policies so the insurance matches the extent of coverage provided.
In too many instances in the past, insurers provided coverage that exceeded the premiums paid for the coverage of SR22 insurance. The guaranteed replacement cost of a home, was one such coverage that was often well in excess of what policyholders paid for.
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