Why are Auto and Home Insurance Premiums in Massachusetts Going Up?
Inflation Continues to Drive Up Insurance Prices — and not just at the gas pump; even the price of eggs has gone up over 300%!1 Auto and home insurance premiums are rising too. When premiums go up, it’s to offset the ongoing impact of higher costs caused by supply chain delays and labor and parts shortages. Read on to help understand what’s driving higher rates in the insurance industry as a whole.
Supply Chain Delays
COVID has created a perfect storm of supply chain disruption. Factories aren’t at full productivity and we’re still dealing with the pandemic’s rippling economic effects.
• Nearly every auto component, from microchips to seat leather, faces a backlog. With demand remaining strong, prices have increased and 96% of repair shops report delays.2
• Home prices are up over 10% since last year. External supply chain pressures are causing a shortage of lumber, roofing, piping, copper wire and more, spiking prices and insurance costs.3
Higher Costs for Parts & Materials
Reduced supply of parts and materials increases the cost to repair your car and home, which drives up insurance premiums.
• Prices of new and used cars are up about 11%.4 Collision costs are up 12%.2 More expensive cars and parts mean more expensive claims.
• Everything from wood to windows is more expensive than ever. The Producer Price Index for construction materials is up over 50%, which means repair costs surge.5
Higher Labor Costs
Demand for skilled workers is outpacing supply five to one. A shortage of laborers means higher wages to recruit and maintain personnel.
• With the increase in new car prices, many people are keeping older cars on the road. Older cars require more service and repairs. The shortage of technicians drives up costs.
• The construction industry is facing a shortage of 200K trade workers.6 Employers are paying up to 50% more than pre-pandemic wage.5 With the smaller workforce, repairs cost more and take longer.
Going Forward
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