If your home or car insurance has gone up recently, you may wonder why. Insurance companies across the US are constantly adapting to changing market dynamics and factors such as severe weather events and economic uncertainty. And on all these counts, the past year has been a turbulent one.
This article looks further into the reasons behind the rising premiums, as well as best practices for policyholders to stay ahead of the curve.
Why are insurance prices increasing?
Insurance premiums have increased due to a combination of factors, including losses due to extreme weather events, inflation and financial stress.
Severe weather has become more frequent and expensive. In the first half of 2025, the US experienced 14 distinct weather and climate disasters, with a total cost of $101.4 billion.1
The severity of damage caused to homes, vehicles and repairs by hurricanes, floods and wildfires results in carriers paying out significant sums in claims.
At the same time, inflation has increased the overall cost of rebuilding and repair. For instance, simple car repairs cost much more today because parts, labor and materials all have become more expensive.
"Inflation is a crucial aspect, impacting nearly every area of our lives," said Gosha Olszewski, VP, Inside Sales Small Business and Personal Lines at Gallagher. "As consumers, we are feeling the pinch at the grocery store, at the fuel pump and in healthcare costs. Personal insurance premiums are no exception."
She added, "There is also 'social inflation,' which is a combination of legal and behavioral trends that make claims more complex and expensive to manage across the industry."
How state-level regulation plays a role in insurance availability
The insurance industry is continuously trying to address the challenges posed by inflation, regional risks, and evolving regulatory and legal frameworks. States that face frequent weather-related risks — such as Florida, California and Louisiana — are exploring innovative solutions and technologies to improve insurance affordability and accessibility for residents.
As it's become increasingly difficult to predict and price coverage, insurance companies are working with state regulators to find a middle ground to protect consumers, with the aim of preventing any sudden premium increases and ensuring fairness in the market.
This cooperation between regulators and carriers involves working together to find sustainable solutions, such as predictive modeling, to ensure reasonably priced insurance coverage for policyholders.
"Collaboration between regulators and carriers can pave the way for more affordable and innovative insurance options to ensure a balanced and resilient market for all," Olszewski said.
How are insurers adapting to the insurance increase?
Insurers are now reshaping their working models and looking at new approaches to manage risk more effectively and make insurance more affordable for policyholders. They're also focusing on building financial resilience by creating stronger capital reserves.
Data and technological advancements are helping insurance providers strengthen their ability to predict and prepare for future events. Across the industry, there's a growing exploration of new models and ideas, such as research into alternative forms of coverage that could offer quicker and more transparent responses in the future.
For example, carriers are exploring parametric coverage as an alternative to traditional insurance solutions. Instead of compensating policyholders based on actual losses, parametric insurance provides payouts based on predefined triggers or parameters. With this, consumers can receive faster, more transparent payments without lengthy claims assessments, helping them recover quickly after an event.
While these concepts are still evolving, they demonstrate how product innovation is expanding more broadly within the insurance sector, with the goal of helping customers recover quickly after a risk event.
What can policyholders do to keep up with the insurance increase?
A few proactive changes can go a long way toward keeping you updated and protected. There are several ways that consumers can be proactive in keeping policies as affordable and protective as possible, even during challenging market conditions:
- Review and understand your coverage better. Before every renewal, check whether your policy has adequate coverage. Consult with an insurance advisor to ensure your policy has sufficient limits and to answer any questions you have on what's covered.
- Communicate with your insurance advisor. Get advice from insurance professionals. Find out how weather events or inflation will affect your policy and make informed decisions based on their guidance.
- Look for discounts. As premium rates continue to rise, inquire about insurance discounts for which you may be eligible. For example, "bundling" your home and auto policies under a single insurer can bring significant discounts.
- Reduce your risk. Invest in upgrades to your home and vehicles to help lower your premiums over time. Simple changes like water leak detection devices or smoke detectors for homes and anti-theft devices for cars can help lower insurance expenses.
- Keep records. Thorough documentation — photos, receipts and records — for your property and cars can simplify and ease the claims process.
Insurance is changing to be more reliable and affordable
As the insurance market evolves, more innovations and practical solutions will help carriers adapt to policyholders' needs and make insurance more reliable and affordable for consumers. Regulators and insurance carriers are working towards making risk easier to identify and control so consumers can be more resilient.
Gallagher is a leading insurance brokerage with a forward-looking lens on the changing insurance landscape. Our insurance advisors and specialists can offer expert insights and guidance to help you successfully secure the coverage you need. If you're looking for the right coverage at the right price or understand your policies better, we're here to help.