Insurance premium increases expected this year
The cost of premiums for auto insurance, home insurance and life insurance is expected to rise between 3 percent and 4 percent in 2009.The cost of premiums for auto insurance, home insurance and life insurance is expected to rise between 3 percent and 4 percent, according to the insurance industry's trade group, the Insurance Information Institute.
On average, a typical auto insurance premium will rise 4 percent to $875 this year, the trade group estimated. Homeowners insurance policies will increase on average by 3 percent to $841.
The industry is looking to recoup losses in the stock and bond markets over the past year, where insurance companies typically invest the earnings from premiums.
As the stock market has tumbled - down by about 40 percent from the all time high of more than 14,000 in October of 2007 - insurance companies now need to raise premiums.
That's the way insurance companies do business, explained Terri Vaughan, chief executive of the National Association of Insurance Commissioners.
"If your expectations for future investment income are lower, that's going to affect premiums," Vaughan said, according to USA Today.
For average term life insurance policies, industry executives predict rates will be 5 percent to 10 percent higher next year, the newspaper reported.
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Posted: April 27, 2009
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