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Inflation is slowing down, but it remains high by historical standards and continues to drive up costs across the economy. Auto and home insurance premiums are still rising as a result of higher costs caused by supply chain delays and labor and parts shortages. Here’s a look at what’s driving these increases.

Supply Chain Delays

The auto and home industries are still feeling the effects of COVID-induced supply chain disruptions.

• Auto Industry: The industry is recovering from semiconductor chip shortages and rising parts costs.
• Home Industry: Home prices are rising while supply is decreasing, with the median price up 2% from last year despite a significant drop in available homes.⁵

Higher Costs for Parts and Materials

The reduced supply of parts and materials is driving up repair costs for both cars and homes.

• Auto Repairs: The average price for a new car is nearly $50,000, up about $10,000 since September 2020.¹ More expensive cars and parts mean more expensive claims.
• Home Repairs: Construction materials are up over 40% from pre-pandemic levels, causing repair costs to surge.²

Higher Labor Costs

A shortage of skilled workers is leading to higher wages, further increasing costs.

• Auto Labor: The average age of cars on the road is a record 12.6 years, and more drivers are returning to the roads.³ Older cars and more accidents mean more repairs, and the technician shortage drives up costs.
• Home Construction: Construction wages continue to rise as the industry faces a shortage of 274,000 workers.⁴

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Page Insurance, Ltd

(203) 453-5258

Sources

1. CarEdge, June 2024
2. ABC National, June 2024
3. Car and Driver, May 2024
4. PolicyGenius, May 2024
5. Forbes, May 2024