The question about home and auto insurance I get more than any other in Louisiana is, undoubtedly, "why are my premiums so high?" Unfortunately, there's no simple answer. The fact is that there are some things that affect rate that we can control, and some we can't. Beyond the litany of personal factors that can or cannot be changed, today we'll only discuss the ones that affect aggregate rates statewide.
Things we can change
Louisiana has the highest percentage of uninsured drivers on the road today. If someone without insurance wrecks into me, I only have two actions I can take: 1. file a claim against my own insurance or 2. take them to court. Option one is obviously preferable, but to have uninsured motorist coverage costs me more money. However, good luck getting someone who can't even pay for car insurance to come up with the money to pay for your car or injury.
That brings up another point: our court system in Louisiana is particularly easy for people (especially attorneys) to exploit. While I appreciate that lawyers have a job to do, and that we have to allow recourse tin court for citizens who are wronged, who do you think really paying for the litany of billboards all over town--in the end, policyholders paying insurance policies, of course.
Things we can't
Our exposure to natural disasters scares insurance carriers. While we have not had a major storm in several years, historically we deal with hurricanes on regular basis. Insurance companies tend to be very profitable in the years without storms, but they may lose millions (or even billions) of dollars as the result of one natural disaster.
The second factor is once related to the first: insurance companies have to have enough money to pay--either their own money or someone else's. Even insurance companies buy insurance (called reinsurance) to make sure they are not financially ruined if there is a major storm. The costs of reinsurance (and the amount that they are regulated to carry) affect clients' bottom lines. Typically, insurance companies make money in two ways: collecting premiums, and then investing them. Most insurance companies have to smart about where they invest, because they never know when they may need a lot of money in a short time. When interest rates are low (other things being equal), rates are typically high. We have been in a historically low interest rate environment of the last decade, but it is possible they could rise in the future.
While in our democratic capitalist system we encourage companies to earn a profit, we want to make sure the amount of profit they make is not at the expense of our clients' best interest. We are in the insurance brokerage business because we work for our clients, not the insurance companies. It's our job to make sure that everyone gets a fair deal, and we have a fiduciary responsibility to recommend competitive products. If you aren't sure if your agent in working for your best interest, or if it's just been a while since you shopped rates, feel free to reach out and let us show you what a good agent can do for you.