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Agency Forward®
By Jeff Rommel

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Helping your personal lines clients navigate home and auto trends

December 10, 2021

There are a wide range of factors that impact insurance carriers and their decisions regarding personal lines coverage. Currently, some of the biggest factors collectively creating a more challenging home and auto insurance landscape include inflation, labor shortages, soaring material and repair costs, and rising accident severity.

In the face of these challenges, how can you continue to retain and grow your business?

Position yourself as a trusted and dependable partner by:

      • Helping your clients better understand the industry-wide factors impacting their home and auto insurance
      • Managing clients’ policies and offering strategies to meet their current and future protection needs

Optimize your clients’ opportunities to reduce their premiums by:

      • Reviewing their policies to ensure their coverage meets their potentially changing needs
      • Leveraging Nationwide’s coverage solutions and encouraging them to take advantage of all discount options available

Homeowners insurance market factors over the last year

Due to rising inflation, it’s become increasingly costly to repair and rebuild homes following property related losses. The consumer price index (CPI) for several household elements has spiked since last year1 —including floor coverings (3.9%), window coverings (8%), major appliances (6%) and overall construction supplies (18.4%).

Labor and material shortages

92% of construction contractors across the country have had trouble securing skilled workers in the past year. 93% expect shortages to continue or worsen in the next six months, contributing to elevated labor costs.2 Amid the COVID-19 pandemic, building material expenses have soared due to ongoing supply chain disruptions and greater interest in home improvement projects including installing updated appliances, remodeling or making new additions. Demand for materials such as lumber and steel has greatly surpassed availability. Lumber and steel prices alone have more than doubled in cost since the initial onset of the pandemic.3 The attainability has been further disrupted by shipping delays.

Rising Claims Severity

Due to a growing number of natural disasters throughout the country, the homeowner’s insurance market has also been affected by an increase in overall weather severity. There were 18 natural disasters with losses exceeding $1 billion in the United States during 2021—including wildfires, droughts, floods, tornadoes, and winter storms.4

Experts predict that both the frequency and severity of natural disasters will continue to rise in the coming years. These disasters can cause severe property damage and pose substantial rebuilding concerns

Auto insurance market factors over the last year

Due to rising inflation, caused primarily by labor and material shortages, it’s become increasingly costly to repair vehicles. The CPI for a number of items and services in the auto market increased over the past year —including used cars and trucks (26.4%), auto parts (8.8%) and vehicle repairs (5.4%).5

Elevated crash frequency and severity

Even with fewer cars on the road in 2020, unsafe behaviors behind the wheel (e.g., distracted driving, speeding, neglecting to wear a seat belt) led to increased and more severe crashes.

Over 38,000 individuals were killed in motor vehicle crashes in 2020. 7.2% more fatal crashes occurred in 2020 versus 2019, reflecting the highest death toll since 2007. 3% more fatal crashes took place in the first six months of 2021 alone.6

Increasing accident costs

Accidents that lead to fatalities also often involve severe injuries.

  • Such injuries influence overall medical bills and claim costs by way of complex procedures (e.g., surgery), advanced treatment plans and extended recovery times.

Vehicles are more expensive to repair

      • Advancing vehicle technology features —including blind-spot sensors, backup cameras, lane detection technology and internet enabled features—keep us safer, but repairs cost more. Vehicles equipped with driver assistance systems can cost twice as much to repair as those that aren’t.7
      • A shortage of skilled auto repair workers, supply chain disruptions for vital auto parts (e.g., car chips) and shipping delays have extended the average vehicle repair time to 15.2 days—nearly three days longer than last year’s average.8
      • An estimated 80,000 auto technicians will need to enter the field by 2024 to keep up with industry demand.9
      • Prolonged repair times may also extend auto claims and associated costs.
      • Renting and replacing vehicles has also become a challenge due to the overall vehicle shortage, with 7.7 million fewer vehicles being produced in 2021 because of supply chain complications.10
      • Industry experts predict that these shortages could press on into 2022, continuing to impact the auto insurance market.

Leveraging Nationwide’s solutions

Helping your clients better understand the industry-wide factors impacting their home and auto insurance

Despite the number of challenges present within the home and auto insurance landscape, Nationwide has a variety of solutions you can leverage to help your clients save money.

Auto

      • SmartRide®: This program monitors driving habits and rewards safe driving behaviors by offering up to 40% policy discounts.
      • SmartMiles®: This pay-per-mile program for low-mileage drivers offers a flexible rate based on miles driven each month.11
      • Policyholders can earn auto insurance discounts for going paperless and receiving policy documents via email.
      • Policyholders can also save for making recurring electronic payments or for paying their bills in full12

Note: Discounts and program availability by state

Home

Nationwide home insurance members can save by participating in the smart home program*. Participants can get up to 10% discounts (an average of $50 in savings).

This program utilizes smart home** monitoring technology to help policyholders:

      • Have more control over protecting their property and preventing potential claims
      • Monitor their homes from their mobile devices for risks associated with break-ins, fires, and water damage—such as open doors or windows, temperature changes and pipe leaks

Note: This program is only available within certain states.13

Home and Auto

Policyholders can save up to 20% (an average of $646 in cost savings) by bundling their home and auto insurance.14 Your clients can save even more by adding a Nationwide life or financial product to their bundle. Your clients can also consider changing their deductibles on their home or auto insurance to help control their monthly expenses.

Moving forward

You can help your clients navigate their insurance needs by helping them understand the marketplace and offering ways to help them save. Consider talking to your clients about these options at each renewal.

*The discount applies to fire, theft and water coverages. National average savings for Home insurance, July 2020.

**Availability varies by state, coverage selections and rating factors. Program criteria differ in Washington and California. The discount for smart home participation will be discontinued if an eligible smart home monitoring system is not purchased and activated within 55 days of enrollment. The smart home monitoring system and related support will be provided by Notion, the third-party system provider. Nationwide is not responsible for the system or any home monitoring.

Sources

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