OUCH! Insurance is getting Expensive!

Have you looked at the increase in your home insurance lately? Wow. We should add this to the iconic

list of things we have to experience like death and taxes. Death Taxes and Insurance. Sounds catchy. I

work closely with an insurance agency, the Texas Dawn Insurance Agency, on a daily basis as many of my

clients also have insurance needs. I chose to work with Dawn Kleinschmidt and her agency for my

personal matters simply because I have never found anyone who is as good as she is. When people ask

me who they should call she is always my go to. So, we were talking the other day about rates, clients,

and other terribly exciting topics when the conversation rolled around to home insurance rates. People

are getting pretty angry out there!

We started discussing how many companies are simply leaving the business in various Gulf states. Just

done with it as the price of various weather disasters just keeps growing. Look at the picture below. In

2022, there were 28 different events that cost over $1 billion each. That is incredible. Over $28 billion

was spent as the direct result of these events. To add another layer, think about the replacement value

of the homes in the US that have increased as property values have increased. Same of course goes for

commercial. Just amazing.

Billion-Dollar Weather and Climate Disasters | National Centers for Environmental Information (NCEI)

(noaa.gov)

That got me thinking. As much as I loathe paying these bills, I wondered what it would have been like to

have invested in them. Granted, some of the largest insurance companies out there are not publicly

traded due to their organizational structure...State Farm, Liberty Mutual, USAA, and Farmers to name a

few and they make up a little over 38% of the market share. What investors can participate in is the

iShares US Insurance ETF (iShares U.S. Insurance ETF | IAK)

Looking at the 5-year chart of this ETF shows that a $10,000 investment would have returned 95%. I am

no “mathlete”, but I can do simple math here. Has my home insurance gone up that much annually? I

don’t think so. Would I swallow that jagged little insurance pill better each year if I were also

participating in the returns of these companies? Maybe.

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