Auto insurance is going up because of the cost of repairs and “social inflation” i.e. higher liability payouts.
The insurance industry goes through soft and hard market cycles. Soft is when there is too much capital trying to insure risk, competition brings premiums down, insurers lose money on insurance and try to make it back by investing premiums. Hard is when capital has left, and the remaining players can raise rates.
Different parts of the industry have different cycles: auto, home, property and casualty, insurance, workers comp, directors and officers, etc. Life, disability, and medical insurance are a different animal.
Climate change has been a big factor, as insurers have been hit with more natural disaster (“catastrophe”) claims than their historical-based underwriting expected. Re-insurers in particular had some very unprofitable years, and are busy raising rates by a lot.
Part of the insurance industry, in particular property and casualty, and reinsurance, is in a hard market currently. So they are making underwriting profits again, and rising interest rates mean they are making larger investment profits too. Insurance is pretty non-discretionary, whether consumers and businesses are doing well or poorly, they still need to have insurance.
I started buying selected insurance stocks about 2 years ago and they’ve been pretty decent. ACGL CB EG. After the peak of Atlantic hurricane season passed, I bought more. Re-insurers - at least the ones I look at - will see most of their claims from hurricane season. If they can get through that few month period without a monster hurricane in Miami or suchlike, then they get to enjoy premiums with relatively less claim exposure the rest of the year. I “think” that happened this year, though 3Q reports are still coming in. 2023 was a big natural disaster year, but a lot of the losses probably aren’t insured losses (earthquakes in Morocco, flooding in China, etc). I am not sure if the Alcapulco hurricane was a big insured loss - I sure hope not, or that the companies I chose didn’t do much business there.
https://www.insurancejournal.com/news/international/2023/10/20/745036.htm
There’s stories about areas of FL and the Atlantic coast where homeowner’s insurance is
prohibitively expensive. I wonder if it’s practical to “hurricane-proof” a house instead of paying giant premiums.