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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
- CarEdge, June 2024
- ABC National, June 2024
- Car and Driver, May 2024
- PolicyGenius, May 2024
- Forbes, May 2024
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