What Causes Insurance Rate Changes?

A Message from Agency President & Founder Nathan Dagley

As we look back on the events of the last couple of years, we could all agree that we have experienced unprecedented events that most of us never imagined we would experience. For many of us the change to working at home, remote schooling for our children, or even being able to buy basic necessities like toilet paper was challenging and stressful and became the “new normal” for a while.

Though things are slowly returning to normal, we are facing new challenges as a result of the events of the last couple of years. Rising insurance costs are one of those challenges. I first established Dagley Insurance in 2001 after beginning my career in 1998 and have seen a lot of disaster events including huge events like Tropical Storm Allison and Hurricane Harvey just to name a couple.  Massive storms and Wildfires have caused serious disruptions in certain States but what we are seeing now across the entire country is unprecedented in my career.  

As consumers, we have experienced increasing costs in so many areas of our daily lives- gasoline, homes, groceries- to name a few. One of the driving factors to these increases is supply chain issues as a result of the pandemic. You may be wondering how supply chain issues would affect insurance rates- especially if you haven’t had a claim.

There are various factors that determine the cost of insurance. Poor planning by insurance carriers, monetary inflation, construction cost, power grid failures, record number of claims, and carrier diversity are some of the primary factors influencing current insurance rates- aside from your personal claims history and risk factors. These unprecedented rate increases are a culmination of these factors and we wanted to take the opportunity to give you a little more information on each of these so you may better understand the reasoning behind these record increases.

Carrier Planning: Insurance carriers must maintain a good financial rating to stay in business, and therefore must balance their financial status-cash reserves to pay claims vs risks they assume. We know that carriers must increase their rates to match monetary inflation and rebuilding costs. Typically, this would result in 2-3% increases each year; however, with the introduction of rising costs for the materials used to build vehicles, houses etc., we are seeing rates increase hit double digits across the country.  

Monetary Inflation: For some time, the United States has increased its money supply, devaluing the money you have. In 2022, it is possible we will see double digit inflation, resulting in your money being worth less.

Construction Cost: Inflation is a driving force for the increase in construction costs, but supply chain issues for materials and labor shortages are also contributing to increased costs. When homes cost more to build, insurance companies are on the hook for paying more to rebuild a home in the event of a claim. The result is an increased amount of insurance needed (Dwelling Amount) and thus increased rates.

Claims: Claims have been on the rise as well in the last couple of years. According to the Texas Department of Insurance, carriers paid approximately 5.7 billion dollars in claims in 2020 and over 10.4 billion dollars in claims in 2021 (2). This increase is multifactorial, though serious weather events like hurricanes, and even winter storms contribute to the increase in claims. On a national level, reports show that underwriting losses in the third quarter of 2021 drove the worst quarterly net income (for carriers) since 2011 (1). Additionally, there was a 5.6 billion dollar net underwriting loss in the first nine months of 2021 compared to a 0.4 billion net underwriting gain in 2020 (1). As mentioned above, insurance carriers strive to maintain financial balance, and these losses have made it necessary for them to increase their income to overcome the significant losses.

So, what are we, Dagley Insurance, doing to combat these rate increases? Rest assured, we are doing everything possible to provide you, our clients, with the most competitive rates in this difficult market. We are continually getting appointed with new carriers to make sure we have the best selection of carriers with the most competitive rates to meet the needs of our clients. We are also providing reviews, as requested, to our clients who have received a renewal with a significant increase in hopes of finding a way to combat the increase. Though we have a large selection of competitive carriers, we find that it is sometimes best to stay put for the time being. In many cases, finding a lower rate is not possible at this time due to the aforementioned circumstances, and it may be better to “wait it out” until the “storm” passes.  In some cases, we are able to find a more competitive rate and better fit for our customers. Either way, we pride ourselves on making sure our customers are taken care of and rest assured that you are no exception.

We are grateful you have entrusted us as your insurance broker and we strive to exceed your expectations by providing the best customer service and being your advocate in a time of need. WE REPRESENT YOU, the insured, and will do everything we can to help you save money and have the correct insurance for your needs.  



  1. Spector, Neil., Gordon, Robert. “Property and Casualty Insurance Results: Nine Months 2021”. https://www.verisk.com/siteassets/media/downloads/insurance-results-report-9-months-2021.pdf
  2. Texas Department of Insurance. “Annual Legislative Report on Market Conditions. 2021. https://www.tdi.texas.gov/reports/pc/documents/pcalr2021.pdf
Editor: Caitlin Ogletree

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