A straightforward guide to help you navigate the changes in insurance and how they affect you.
The insurance industry has had many ups and downs in past years, including natural disasters and economic changes. These unwanted events have sent ripples through the insurance scene, forcing everyone to take a good look at risks and coverage.
Why is insurance changing?
Insurance providers across the map have realized it's time for a little tune-up on products, practices, and pricing. Why?
Two main causes of market changes are inflation and losses from increased catastrophic weather events. Simply put – The U.S. Economy and Mother Nature were no fans of ours in 2023.
Joey Kenney, CFM's VP of Underwriting & Product Development, echoes that statement, noting our industry is still facing sky-high inflation and more severe weather threats. This has resulted in poor operating performance, leading to rate increases and limitations of coverage.
"I can’t help but refer to 2023 as a strong cocktail of problems. Some might call it a recipe for disaster. But that's exactly what happened in the insurance industry, affecting everyone, including CFM. In 2024, it's crucial to teach our insureds how to reduce losses and avoid them altogether when possible."
Kent Peterson, CFM's VP of Claims, agrees. He states that both the company and the industry have faced mounting challenges. Beyond severe weather, supply chain problems, rising prices, and economic pressures have posed major problems.
"The Midwest should treat wind and hailstorms as seriously as coastal states treat hurricanes. I view 2023 as a wake-up call for everyone in the industry.
Safeguarding our policyholders for the future is paramount. We must make changes to stay financially stable and keep our promise to customers when they need us most. This means adjusting policies, rates, and more."
What do these changes mean for you?
Full transparency is not just a catchphrase – it's our promise to keep you informed, even when the news being shared isn’t great. If you've read this far, you've likely resonated with the common trends and patterns at the center of all the changes. This year, CFM customers – and those insured with other carriers – will likely notice these adjustments to their insurance policies:
1. Higher Premiums
The most unpredictable factor impacting insurance premiums is the frequency and severity of weather events resulting in catastrophic losses. As we carefully maneuver through an era of uncertainty, it's crucial to adapt, reinforcing our resilience against emerging risks. This and many other factors can lead to a premium increase.
As a mutual company owned by our policyholders who collectively share and manage the risk, the decision to raise rates is a strategic measure. It ensures that we can meet potential claims for our insureds in 2024 and beyond, strengthening our pledge to defend their financial security.
2. Deductible Adjustments
If a claim is covered, the amount withheld from your payout is your insurance deductible. In the past, some policyholders had flexibility in choosing their deductible amount based on their coverage or policy type. However, they may notice that their deductible has a slightly different structure this year. Kent Peterson explains how he figures deductibles in relation to Actual Cash Value (ACV) coverage and building materials today.
"Customers will experience increased prices and a greater focus on wind and hail damage deductibles. In addition to rate increases, policyholders can expect more attention placed on wind/hail-specific deductibles and Actual Cash Value on roofing materials and surfaces. A major challenge we faced in 2023 was roofing prices increasing by 20-40%," said Peterson.
Joey Kenney breaks it down further, adding:
"We moved to a 1% wind and hail deductible. For example, if your home is insured for $300,000, your wind and hail deductible will now be $3,000."
3. Policy Restructuring
Due to the fluctuating situation and increased risks, we have reviewed and reorganized a large part of our business. This approach helps policies align with current risks and costs.
Considering that material shortages and other infamous contributors have escalated expenses, what once cost a modest amount of money to rebuild may now cost triple that in a claim scenario. Of course, all of these decisions are subject to reevaluation when our economy trends in the right direction again - hopefully in the near future.
Our experienced claims, data analysts, and underwriting professionals closely monitor the situation.
How can you be proactive?
1. Remain Industry-Informed
As the saying goes, knowledge is power, and staying informed is key. At CFM, we provide various platforms to stay connected with our policyholders, ranging from social media to email correspondence. Get updates on our products, insurance news, and tips by following our online pages and subscribing to our emails.
2. Review Your Policy Annually
When you get CFM policy correspondence in your mailbox or inbox, allocate some time to review your coverage. Ensure you understand the terms, coverage limits, and any recent changes to your Declaration (Dec) Page. If you have any questions, don't hesitate to contact your local insurance agent.
Remember - life events can significantly affect your insurance coverage. So, immediately fill your agent in on changes like these.
3. Keep Claims Prevention Top of Mind
Being proactive in preventing claims benefits both insurance companies and policyholders, as well as the wider community. When people take care of their homes, farms, and cars and stay aware of the weather, it reduces problems for everyone.
Our Claims Department works with tech-savvy partners to provide policyholders with tools to reduce losses. Kent Peterson shares more on that ongoing project:
"We're dedicated to enhancing our policyholders' awareness of various weather events. Discussions and plans are underway with a developer to facilitate direct communication through text alerts ahead of dangerous weather."
Although we cannot control storms, we can all try to stay informed and prepared ahead of the sporadic weather Missouri is famous for.
4. Communicate With Your Agent
Your agent is more than just a name on a policy. They help you during unexpected situations and maintain open communication throughout your insurance experience. Just ask the CFM Team, featuring Policyholders Parker and Penny, led by their Awesome Agent, Angela.
Angela supports Parker and Penny during tough times, not just handling policies. She's the local expert, attuned to the specific challenges that homeowners like them face in Missouri. Angela is crucial in Parker and Penny's insurance journey, explaining policies and helping with claims through open, responsive communication.
You, too, can keep in touch with your agent through these beneficial channels:
- Phone, Email, or Text
- In-Person Consultation
- Policyholder App
Embracing the Future Together
Change is the only constant, and in the realm of insurance, it's a catalyst for progress.
We encourage you to engage with us, ask questions, and actively participate in formfitting your policy to suit you best year after year. And don't forget to take advantage of our discount progams.
The changes in 2024 show our dedication to protecting your valuable investments and adapting to outside influences. We know you could go elsewhere for your insurance needs - but you've stayed with us all these years. Your loyalty affirms that you prioritize thoughtful customer service, community impact, and traditional Missouri values over mere price considerations.
For 155 years and counting, we've stood as a steadfast shield for Missouri families. Rest assured, we're here to stay, even after braving a most challenging year. Your trust is our foundation; we'll continue building a secure future for you and your loved ones.
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