Insurance in Colorado: A Gloomy Outlook
We all know the news loves doom and gloom, but when it comes to Colorado insurance, we're all ears. These aren’t just scary headlines – these ones are hitting close to home, and we're here to help you make sense of it.
Colorado Insurance Companies are Tightening Their Belts
Here's the scoop: 76% of Colorado insurance companies are tightening their belts in 2024, with some even considering canceling ALL home insurance policies in the state. Crazy, right? But one look at the local headlines explains why. Storms, fires, aggressive drivers, vehicle and property crimes – it's a perfect storm of costly events making insurers sweat.
The Combined Ratio Problem
Let's talk about the magic number keeping insurance bigwigs up at night: the combined ratio. If an insurance company pays out more than it collects, that ratio goes over 100, and they're in the red. In Colorado, it's sitting at a whopping 111%! That means for every dollar they bring in, they're shelling out $1.11. When you're dealing in billions, those pennies add up fast.
Frequency and Severity: The Driving Factors
What's driving this? Time for some quick insurance-geek information with a lesson on frequency and severity. In Colorado, we're seeing more claims (frequency) and each claim is costing insurance companies more (severity). According to the Rocky Mountain Insurance Information Association, the average claim cost in Colorado has shot up by 179% over the last decade. Factor in recent inflation, and we're looking at a 200% increase. An $8,000 claim from ten years ago? That’ll be $24,000 today, please and thank you. Colorado has the #1 highest inflation in the country when it comes to claim payouts!
What to Expect in the Future
So what can we expect going forward? Insurance companies are in business to make money. As long as they’re losing money in Colorado, brace yourself for higher deductibles, especially for homeowners in wildfire-prone areas. We might even see the introduction of "mega-deductibles" for certain types of claims, like hail damage. Also, don't be surprised if you're asked to shoulder more responsibility for smaller claims too.
The Bottom Line: Buckle Up for a Wild Ride
The insurance landscape in Colorado is going to be a rollercoaster until companies figure out how to balance their books. Until then, our wallets are going to feel the pinch. So stay informed and maybe start that rainy day fund. In Colorado's case, it might be more of a haily, fiery, property-theft day fund – but hey, that's just life in the Centennial State these days. Whatever happens next, it will be more important than ever to have experts and specialists on your side to help. That’s what we’re here for!
