By Kevin Dipetrillo, Partner, PointeNorth Insurance Group
A client called recently and asked, “Are my insurance premiums going up at renewal?” I didn’t even need to look to answer the question. These things are certain in life: death, taxes, and rising insurance premiums. Isn’t that how the saying goes?
We’ve been in a prolonged market of rapidly rising property and liability insurance premiums dating back to 2019. Why? When will it end? What can we do about it? These are big questions that I’ll tackle one at a time. Today, we’ll discuss why we’ve seen double-digit rate increases for six years, compounding premium growth and frustration.
I’ll get this out of the way right out front. We’re not going back to where we were. The causes of the premium increases of the last decade are structural and are highly unlikely to change. Premiums will level off in the future, but anything beyond stability or modest reductions from competition is extremely unlikely.
According to the 2025 Profitability report published by Independent Insurance Agents of Georgia and based on data from A.M Best, insurance companies had a -8.7% underwriting profit in Georgia in 2024. For every dollar they took in, they paid out nearly $1.09 in claims and expenses. Consider the $35 billion in Georgia premiums and you’ll see that insurance companies have been losing billions of dollars per year in our state for years on end. Profitability has been declining for the last three years, even as rates have increased. Out of 50 U.S. states and D.C., Georgia ranked 50th in profitability in 2024 (thanks, Louisiana). Some types of insurance have fared better than others. Georgia has a better than average Workers Compensation market, but the markets for all forms of auto and property coverage rank at or near the bottom of the country.
I know, let’s all cry for the insurance companies. Why should we care? At the end of the day, the function of the insurance industry is to pool risk and distribute it evenly among market participants. If insurance companies are losing money at unsustainable rates, then the public is losing money at unsustainable rates. It’s not an insurance company problem; it’s a problem for everyone in our community. The insurers are just aggregating the data. So where is all the money going?
More frequent and more severe weather patterns are causing record amounts of property damage each year. Noticed any new roofs lately? It’s not just your neighborhood anymore. Commercial roofs are being replaced at record rates as well. Water leaks are another leading cause of property claims. The cost of repairing structures has risen rapidly since 2019, so we have more frequent property claims that cost more to repair (-6.7% profit for commercial property and -7.3% for homeowners).
On the auto insurance side, vehicles are getting more sophisticated and more expensive to repair. The bumper that used to cost $500 now costs $4,000 and is laden with computerized sensors. There’s no such thing as a small claim anymore. Then there’s the other person in that auto accident. Take a careful look at your personal or commercial auto premium and you’ll see a vast majority of the premium comes from liability insurance, not damage to your own vehicle. Every billboard on the interstate advertises a personal injury attorney promising a nuclear verdict for accident victims. Fueled by large verdicts and private equity dollars, the Personal Injury industry is booming. The Georgia legislature passed Tort reform in 2025 that’s a modest step in the right direction, but more needs to be done. Whatever impact the current legislation has will take a couple years to materialize as cases are tried. Personal auto rates are due for some stabilization (-0.4%), but commercial auto is still in dire trouble (-13.8%).
The only good news is that we don’t have to improve much before companies and families alike see some relief to the relentless march upward. Insurance companies make their money in two ways. First, they can make an underwriting profit where they pay out less in claims and expenses than they take in from premiums. Second, they can make an investment profit. Insurers invest all those premium dollars while they’re waiting to pay out claims. Because of strong investment returns, insurers are more inclined to operate at a very small underwriting profit. They would all love to make an underwriting profit of 10% or more, but they’ll be content to break even or post a single-digit profit while investment returns are strong. So, with a little luck from the weather and, yes, a little more rate increase, we could get to sustainable premiums and inflation level increases each year. Do you remember those days?
In the March/April issue, we’ll discuss what you can do in this market to combat premium increases. Until then, stay safe.
KEVIN DIPETRILLO is a Partner at PointeNorth Insurance Group. With a degree in Risk Management from The University of Georgia, he has been helping businesses and High Net Worth households with their insurance needs for 25 years. Visit pointenorthins.com to see how the company can serve your needs.
