The Mississippi Insurance Department (MID) often receives questions about insurance rate increases. Inflation and supply chain issues have affected the cost of goods around the world and right here in Mississippi. Insurance companies set prices to match the cost of future claims. They consider your personal risk factors and the overall expenses on all claims.
Most insurers who contact MID are looking for ways to lower their rates. Below you will find information that explains how rates are set and how to find the best rate for yourself.
- What is a premium?
- The amount you pay each month (or each year) to keep your insurance policy active
- What is a rate?
- The amount of money necessary to cover losses, cover expenses, and provide a profit to the insurer for a single unit of exposure.
Considerations When Determining Premiums and Rates
Companies consider many factors when determining premiums and rates.
Considerations for Home Insurance:
- Where you live (zip code or county)
- Your claim history
- The cost to replace your home (note, this is not its market value)
- Your selected deductible
- Your home’s age
- The age of your home’s roof and material
- Your home’s construction type
- Your credit score
- Your driving record
- Local fire protection
Considerations for Auto Insurance:
- Your driving record and claims history
- Where you live and garage your car
- Your age, gender, and marital status
- The cost to replace your car
- The type of car you drive
- Your selected coverage limits and deductibles
- The annual mileage you drive
- Your credit score
- Risky driving (more accidents could lead to increased rates).
Other Factors Affecting Insurance Costs
- Weather Events
- The frequency and size of these events add to claim costs. When insurance companies pay out more claims due to the increase in natural disasters, the result is higher rates for consumers. The insurance industry does not look at prior events to determine rates – they look to the future using modeling. Current models shows us that tornadoes and hurricanes are increasing. That means risks are increasing, so prices also increase.
- Reinsurance
- Reinsurance is the process by which insurance companies transfer a portion of their risk to other companies. The reinsurance market has experienced significant growth in recent years, driven by increased demand for protection against natural disasters and other catastrophic events. Insurance companies purchase reinsurance to protect against damages from events like a Category 4 or Category 5 hurricane. This is not just a Mississippi issue. Every state and every insurance company is impacted by the reinsurance market. We are seeing incredible financial strain on these companies. But if a company can afford reinsurance, it’s a benefit to them and their customers. Reinsurance allows them to offer comprehensive insurance policies at competitive rates, and reinsurance is essential for the stability of the insurance industry.
- Inflation
- Inflation is up across the U.S. which has resulted in increased costs for materials and labor when building or repairing homes and vehicles. Most insurers are seeking rate relief due to the cost associated with repairing and rebuilding homes as materials and labor costs have surged in price. Mississippi is not alone in this circumstance, the entire US is feeling the same pressure. When insurance companies encounter increased expenses for materials and labor during the process of settling claims, these additional costs are factored into the premiums they charge.
Regulation and Rate Filings
Insurance companies can change their rates and premium formulas by requesting a rate review with the Mississippi Insurance Department. The Property and Casualty Rating Division (P&C) is responsible for reviewing the rates, rules, and forms for all property and casualty policies sold by licensed insurance companies in the State.
There is a good deal of misinformation about rate increases. People commonly think that insurance companies raise their rates purely out of greed. That is not the case. Rate increases are not arbitrary. They are based on careful analysis of risk and actuarial data. Insurance companies need to balance the cost of providing coverage with the need to remain financially stable and able to pay claims.
When companies submit requests for changes in rates, rules, or forms, Division personnel provide the Commissioner a summary of findings and recommend approval or disapproval. Actuarial assistance is sought on certain filings, particularly those involving changes in rates.
How To Lower Your Premium
Consumers often call the MID to ask how to save money on insurance. We’ve listed a few of the ways to do that below.
Lowering the Cost of Home Insurance:
- Shop around
- This may take time but it could also result in savings. Get recommendations from family and friends and call local agents for advice. Think about how much you can afford to pay. Educate yourself on the different types of policies available. When you talk to an insurance agent, ask them what they would do to lower your costs.
- Check each company’s complaint history through the National Association of Insurance Commissioner’s Consumer Information Source, https://content.naic.org/cis_consumer_information.htm.
- You can also find company rating services on our website, https://www.mid.ms.gov/mississippi-insurance-department/companies/company-rating-services/
- Increase your deductible
- The deductible amount is what you will need to pay out of pocket in the event of a loss before your insurance provider covers the claim. Increasing your deductible could result in significant savings on your premium. But remember, you’ll have to pay more out of pocket if you have a claim. It’s important to note that policies often feature separate deductibles for wind and hail losses.
- Make improvements to your home
- Mitigation efforts can include building at a higher elevation, adding hurricane shutters, fastening your roof to the walls with hurricane straps, and buying flood insurance, among other efforts.
- Mississippi state law requires insurance companies to give discounts to people who mitigate their home to the Insurance Institute for Business and Home Safety (IBHS) standards, and insurers have filed discounts with MID ranging from 15 percent to 30 percent for those fortified homes.
- The Strengthen Mississippi Homes program offers mitigation grants to homeowners.
- Bundle home and auto policies
- Buy your home and auto policies from the same insurer. Many companies offer a discount for buying your home and auto policies from the same insurer. However, you should make sure that the premiums with the discount do not total more than if you bought policies from different companies.
- Look for discounts
- Ask your agent about discounts for installing smoke detectors, burglar alarms, monitored security systems, deadbolt locks, and sprinkler systems.
- Consider your needs once a year
- Talk with your agent about your needs to make sure you have the appropriate coverage.
- Cover items like jewelry and art under an endorsement.
- Create a home inventory list so it’s easier to file a claim.
- Create a financial plan or emergency savings account to cover your deductible and other expenses in the event you need to file a claim.
Many of the same methods to reduce your homeowner premium also apply to lowering your auto premium.
- Improving your driving record, credit or insurability score, and what you drive could lower your premium.
- Reduce coverage on older vehicles.
- Shop around.
- Increase your deductible.
- Bundle home and auto policies.
- Look for discounts.
Finding an Agent
Looking for an agent in your area? Here are a few ways to find one:
- Give the company a call. You can find the phone number at the beginning of their company profile.
- Visit the company’s website for an interactive agent locator tool, which usually provides the address and phone number of your local agent.
- Reach out to an agent association. They can help you find a local agent.
- Independent Insurance Agents of Mississippi – 601-939-9909
- Once you find an individual in your area, it is important to check their license status.
- You should also consider the company’s financial stability and customer service.
- Remember not to cancel your old policy until the new one is effective. A policy is only considered effective when the insurer or its local agent has bound the coverage.
- It’s crucial to provide truthful answers to all questions on the application. Incorrect information could lead to an inaccurate price quote or the denial or cancellation of coverage.
Things to Ask Your Agent
Ask your agent the following questions.
- Am I in your lowest-priced company or tier? If not, why?
- How can I get a better rate?
- What perils or coverage is excluded or limited in the policy?
- May I add the peril or coverage back into the policy?
What My Policy Does Not Cover
Homeowners insurance does not cover floods, earthquakes, backup of sewer and water, home businesses, home daycare, identity theft, nuclear accidents, or war. Talk to your agent about buying add-on coverage for those things, as needed.
Flood coverage can be purchased separately through the National Flood Insurance Program (NFIP). Ask your agent or carrier for more information, or you may contact the NFIP at 1-888-CALL-FLOOD or www.floodsmart.gov.
Insurance policies should not be used for routine maintenance issues or minor problems. Home maintenance could prevent a costly insurance claim.
Filing A Claim
Companies are not allowed to raise the premium, terminate a policy, or deny issuing or renewing a policy simply because a policyholder asked about making a claim or sought information about the claims process. For policies that have been in effect for over 45 days, companies cannot terminate, refuse to renew, or increase the premium solely because the first claim has been filed against the policy.
Cancellation and Non-Renewal
You or your insurance company may decide not to renew a policy when it expires. According to regulations, companies are required to provide policyholders with a minimum of ten days’ notice before the date of cancellation and 30 days’ notice before the date of non-renewal. If you believe that the non-renewal is unjust, we suggest attempting to resolve the matter directly with the company. If you’re unable to reach a resolution, please do not hesitate to contact the Mississippi Insurance Department at 1-800-562-2957.
A company can also cancel a policy but only in the following situations.
- Failure to pay the premium.
- Committing fraud or serious misrepresentations on the application.
- Willful actions that increase any hazard the policy insures against.
- Violating local regulations that increase hazards.
- Substantial increase in the risk which increases any hazard insured against.
- Conviction of a crime increasing the insured hazard.