An insurance premium rate increase isn’t always bad!

It is an indication of something good because it is still a promise that your increasing losses will be reimbursed

Price rise is bad. It pinches you where it hurts the most. You have to rethink and regroup your life and plans.

However, when premium rates are raised, as in many things in insurance, it is not exactly what it seems to be.

An increase in premium is an indication of something good because it is still a promise that your increasing losses will be reimbursed.

When insurance companies increase premium rates, they are catching up with increasing claims. The way it works in the real world, they rarely are ahead of that race.

There may be a higher number of claims (as during COVID-19 or a natural disaster), claims of higher value (due to rising cost of healthcare or car repairs or whatever) or a combination of both.

Price rises as well as unforeseen events can through the economics of insurance into disarray. Add to this the complications of investment returns with interest rate drops and tanking stock markets.

Higher claims logically lead to less profits or even in losses for the insurer. It’s in our own interest that the insurer has a sustainable and profitable business because he and his company have to be around to pay our claims, for a few decades even in the case of life insurance policies and annuities. If increasing premium is the way for the insurance industry to ensure business continuity, then that is a good thing, for you.