I had a great luncheon reunion at 100 Sails in the Hawaii Prince Hotel with three associates of the Hawaii Natural Energy Institute at the University of Hawaii. One of them sent me the following e-mail.
And Pat, I was going to suggest today that you save some space in a future blog to write (complain) about how climate change is negatively impacting insurance rates — not only the affordability but the availability as well. My home, hurricane, and umbrella insurance rates have made quantum jumps over the last several years. Last year alone, my hurricane insurance rate increased by 100% (it would have increased even more if I didn’t double my deductible). I received a quote for umbrella insurance a coupla days ago — 60% increase over last year. A half year ago, my Allstate homeowner’s quote took a quantum leap so I contacted State Farm to see if I could get a better deal — State Farm checked my address online and noted that the bottom story of my 50-year old home is single-wall construction — it’s essentially uninsurable.
So I asked Google AI if insurance rates have recently skyrocketed up.
Yes, most insurance costs have dramatically increased in recent years. Homeowners insurance premiums rose by an average of 24% from 2021 to 2024
, while car insurance premiums skyrocketed by 55% since February 2020. Family health insurance costs have risen 26% over the past five years, with further sharp increases anticipated due to expiring subsidies. 
- Homeowners Insurance: Driven by climate-related severe weather, increased construction costs (inflation), and higher reinsurance rates, particularly in states like Florida and Louisiana.
- Auto Insurance: Increased due to higher repair costs, more advanced technology in vehicles, and increased frequency of accidents, particularly in urban areas.
- Health Insurance: Driven by rising medical provider wages, hospital system consolidation, and increased utilization of expensive, new treatments.
- Market Factors: A "tight" reinsurance market has forced insurers to pass higher costs to consumers to maintain profit margins.
- Homeowners: Average annual premiums reached $3,303 by 2024.
- Health Plan Members: Those on Affordable Care Act (ACA) plans face significant premium increases, with potential for premiums to nearly double if subsidies expire.
- Drivers: The 55% surge in premiums since 2020 has significantly reduced affordability for many drivers.
- The expiration of the Affordable Care Act (or Obama Care) at the end of last year will proobably double insurance costs in 2025.
- Chances are that younger and healthier people will disproportionately choose not to purchase health insurance when it become more expensive.
- If they do exit, the costs will even further increase.
- This will lead to a death spiral with further disenrollment and even higher premiums.
Yes,
healthcare in the United States is significantly more expensive for Americans than in most other developed countries, often costing double the per capita amount of its peers, despite often resulting in worse health outcomes. In 2024, U.S. healthcare spending was estimated at $14,885 per person, compared to an average of $7,371 for other wealthy OECD nations. Here are the key findings regarding U.S. health spending:
- Higher Costs, Not Higher Usage: Contrary to popular belief, Americans do not use more healthcare services. In fact, Americans have fewer physician visits and shorter hospital stays than residents in other developed countries.
- "It's the Prices, Stupid": The primary driver of higher spending is the cost of services, drugs, and administrative expenses, rather than the quantity of care provided.
- Key Drivers of Cost:
- Inpatient/Outpatient Care: Payments to hospitals and doctors for services are substantially higher in the U.S. than elsewhere.
- Pharmaceuticals: Prescription drugs often cost much more in the U.S. than in peer nations, sometimes up to 10 times higher for certain drugs.
- Administrative Waste: The U.S. spends five times more on administrative costs per person than the average of other wealthy nations, often due to a complex, non-universal system.
- Lower Performance Metrics: Despite the high spending, the U.S. often lags behind in health outcomes, with lower life expectancy, higher maternal mortality rates, and higher rates of avoidable deaths.
- United States: $14,885
- Switzerland: $9,963
- Germany: $9,365
- Canada: $7,301
- United Kingdom: $6,747
While some countries with universal, private-partnered systems like Switzerland also have high costs, the U.S. remains an outlier in terms of both total spending and the burden placed on consumers, with many Americans reporting skipping care due to costs.
Lowering U.S. health insurance costs requires a multi-pronged approach: strengthening the Affordable Care Act (ACA) by extending subsidies, curbing drug prices through Medicare negotiation, enhancing market competition by selling insurance across state lines, and reducing administrative waste. Additionally, shifting toward value-based care and expanding preventative health services can reduce long-term, high-cost medical expenditures.
Lot's of luck to the above! Medical lobbyists are not even mentioned in these AI summaries.
Based on recent data, U.S. auto insurance premiums have risen significantly due to inflation, higher repair costs, and increased accident frequency, with rates rising by 12% from 2024 to 2025 following a 17% increase the previous year
. To reduce auto insurance costs in the U.S., consumers can take several proactive steps:
Immediate Action Strategies
- Shop Around and Compare Quotes: Comparing rates from at least three different companies is the most effective way to find lower premiums, with some drivers saving a median of $461 annually.
- Raise Your Deductible: Increasing your deductible (e.g., from $500 to $1,000) can lower collision and comprehensive premiums by 15% to 30% or more, though it increases your out-of-pocket cost if an accident occurs.
- Bundle Policies: Combining auto insurance with home, renters, or life insurance can reduce premiums by 5% to 25%.
- Pay In Full: Paying your annual or semi-annual premium up front can save on fees associated with monthly installment payments.
- Drop Coverage on Older Vehicles: If your vehicle is older and its market value is less than 10 times the annual premium, consider dropping collision and comprehensive coverage.
Long-Term and Behavioral Savings
- Utilize Telematics/Usage-Based Insurance (UBI): Many insurers offer apps that track driving habits (speed, braking, time of day). Safe drivers can see substantial discounts.
- Improve Credit Score: In most states, insurers use credit-based scores to set rates. A higher credit score can significantly lower premiums.
- Maintain a Clean Driving Record: Avoiding accidents and traffic violations is the best way to keep rates low. Taking a defensive driving course can also offer discounts of up to 15% in many states.
- Report Low Mileage: If you work from home or drive less than 10,000 miles a year, inform your insurer to qualify for lower rates.
- Choose the Right Car: Vehicles with advanced safety features (anti-lock brakes, airbags) and lower repair costs generally cost less to insure.
Tips for Specific Situations
- Teen Drivers: If a teen driver is on your policy, look for "good student" discounts (often 5% to 25% for a B average or better).
- Young/New Drivers: Rates generally start dropping at age 25.
- Retired/Older Drivers: AARP members or those who take approved defensive driving courses may get special discounts.
Yes, homeowners insurance rates have risen dramatically, increasing nearly 70% since 2021 due to climate-related risks, higher rebuilding costs, and inflation
. Nearly half of U.S. homeowners experienced rate hikes in the past year, with average premiums now exceeding $2,300 annually. Costs are projected to continue rising in 2026. Key Reasons for Recent Premium Increases:
- Climate Change and Natural Disasters: Increased frequency of catastrophic events like wildfires, hail, and hurricanes have driven up claims costs.
- Rising Reconstruction Costs: Higher costs for labor and building materials mean it costs more to repair or replace homes.
- Higher Home Values: As home prices have increased, so has the cost to cover their replacement value.
- Market Adjustments: Insurers are aggressively increasing rates to offset heavy losses and manage risks, especially in high-risk states like California, Florida, and Texas.
Impact on Homeowners:
- Record Costs: Insurance now represents a record 9% of typical monthly mortgage payments, according to a report in late 2025/early 2026.
- Reduced Coverage: To manage costs, many homeowners are reducing coverage, which leaves them more vulnerable.
- Market Instability: Some insurers are limiting new policies in high-risk areas.
Okay, I'm retired, and, don't pay any insurance at all, so I actually am not affected. However, if you are young, or younger, and seek an opportunity, here is what Google AI says about getting into the insurance business.
Based on industry data and trends for 2026, it is considered a very strong, albeit challenging, time to enter the insurance business. The industry is currently facing a "great compression" where high retirement rates (estimated at 400,000+ vacancies over the next 15 years) are meeting a growing demand for coverage.
Here is a breakdown of why 2026 is a unique, good time to get into the insurance business.
1. High Demand & Economic Stability
Constant Demand: Insurance is trend-proof, driven by long-term needs for security regardless of economic cycles.
- Growth Potential: The global insurance market is projected to grow to over $11.6 trillion by 2030, with a 6.6% compound annual growth rate (CAGR) expected in 2026.
- Niche Opportunities: There is high demand for specialized insurance, such as cyber liability, and opportunities in the gig-economy/microinsurance sectors.
2. Massive Talent Drain (Immediate Hiring Need)
- The "Great Compression": Roughly half of the insurance workforce is expected to retire within the next 15 years, creating urgent demand for new professionals.
- High Need for Sales/Relationship Roles: Despite automation, there is a strong need for human interaction in complex sales (e.g., life insurance, commercial lines), where building trust is critical.
3. The Role of AI and Technology
- Early Adoption Advantage: The industry is adopting AI-driven analytics, allowing agents to identify risk and profitable opportunities faster than competitors.
- Increased Productivity: Generative AI is being used to automate tedious tasks, enabling agents to spend more time on sales and client service.
- New Tools: Specialized AI agents are being launched to handle prospect identification and lead scoring, potentially freeing up to 45% of a producer's time.
4. Challenges to Consider (The "But")
- Evolving Risks: Climate change and social inflation (higher legal, medical costs) are creating high-risk environments, requiring smarter underwriting.
- Tech Literacy Required: The industry is moving toward a digital-first approach; new entrants must be comfortable with data-driven tools, AI, and CRM systems.
- Hard Market Pressures: While market conditions are changing, some areas still face reduced capacity, making it harder to place certain risks.
If you are looking for a stable industry with high earning potential, a high demand for new staff, and the opportunity to build long-term client relationships, 2026 is an excellent time to start. Success will likely depend on embracing digital tools and focusing on high-value, complex, or niche coverage areas.
Well, back to our lunch at 100 Sails which began this posting. I recommend that they retire and get into a seniors' community, like me. About that gathering, I had a fish dish, with a Bloody Mary and glass of Chardonnay.
-
