- Dow component Travelers said insurance premiums that it charges are still soaring, at a time when other key input costs are falling.
- Homeowner renewal premiums skyrocketed 21%, while auto policy renewal premiums jumped 17%.
- Although rising premiums are good news for insurance firms such as Travelers, it’s bad news for customers.
A stealth inflationary cost is biting into corporate profits.
While some companies are now seeing lower input and freight costs, one expense is not falling: insurance.
In its earnings report Friday morning, Dow component Travelers said insurance premiums that it charges are still soaring. Premiums on business policies jumped 14% in the last quarter. Consumers are feeling the pinch, too. Homeowner renewal premiums spiked 21%, while those for auto policies jumped 17%.
Those higher prices aren’t deterring demand, though. The insurer noted “retention remained historically high” and “new business increased significantly.”
Although rising premiums are good news for insurance firms such as Travelers, they are bad news for customers — whether they are individuals or companies.
Soaring insurance costs have hit companies such as freight shipper J.B. Hunt hard. During Thursday’s earnings report, it said it took a hefty $53 million charge, or 38 cents per share, related to higher insurance and claims expenses in the latest quarter.
“As we reset the premiums going into 2024, we saw upwards of 50% to 60% increases in those premiums,” Chief Financial Officer John Kuhlow told analysts during the company’s earnings call. “And so when we talk about the inflationary pressures that we’re seeing in 2024, it’s mostly around our premiums.”
He added that claims costs are “what’s driving a lot of the inflationary pressures” for J.B. Hunt.
CEO John Roberts reiterated those sentiments.
“As an industry, we are also seeing unprecedented pressure in the area of claims cost or settlements,” he said. He added that “ultimately, these inflationary costs get passed on to customers and consumers.”
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Source: Business - cnbc.com
