Navigating the New Normal: Insurance Insights with Karl Susman

Published Date: 03/12/2024

Navigating the New Normal: How Inflation, Climate, and Consumer Choices Are Reshaping Insurance

In today’s world, the phrase “new normal” applies to almost everything—from how we work to how we shop. But few industries illustrate this shift as vividly as insurance.

As Karl Susman, host of The Insurance Hour, explains in his latest episode, both consumers and insurers are grappling with unpredictable weather, soaring costs, and inflationary pressures that have fundamentally changed how risk is assessed and priced. From wildfires in California to floods in Texas, these challenges are not isolated incidents—they’re signals of a global transition in how insurance works.

This blog explores the key themes from Susman’s discussion: the impact of inflation on premiums, why rates differ so much across states, and what practical steps consumers can take to protect themselves and control costs.

1. Weather Unpredictability: The True Meaning of “New Normal”

Susman opens with an example familiar to many Californians: sudden weather alerts interrupting sunny days with warnings of flash floods or severe storms. “It’s not hyperbole to say never before,” he remarks. “Weather events we used to consider rare are now routine.”

That unpredictability—what meteorologists once called “acts of God”—has become the norm. And it’s not just California. Recent wildfires in Texas destroyed over 500 homes, shocking residents who rarely associate the Lone Star State with large-scale fire disasters. Even more concerning, many of those affected homeowners were uninsured.

When Susman investigated why so many had gone without coverage, the answers were sobering: “A lot of people said the premiums were too high. They simply couldn’t afford it.”

This raises an uncomfortable question for policymakers and the public alike: are rising insurance costs pricing people out of protection—or are consumers underestimating the true cost of going without it?

Susman doesn’t assign blame but points to a bigger picture. “When we see insurance prices going up, there’s a reason. It’s not random, and it’s not just happening in California or Florida—it’s happening everywhere.”

2. Why Premiums Differ So Widely Across the U.S.

To illustrate just how uneven insurance pricing can be, Susman rattles off some eye-opening numbers:

• Alabama: $2,085 average annual homeowners premium
• Alaska: $1,019
• California: $1,266
• Colorado: $3,212
• Kansas: $4,072
• Oklahoma: $4,565
• Vermont: $694

At first glance, these disparities seem arbitrary—but they’re not. Premiums reflect risk, and risk is calculated based on both loss history and rebuild cost.

“Insurance rates aren’t set by someone flipping a coin,” Susman explains. “They’re based on actual data: what it costs to rebuild after a loss, how often losses occur, and what risks exist in that region.”

For instance, California’s rates are moderate compared to Kansas or Oklahoma, not because it’s safer, but because rebuilding costs, mitigation efforts, and regulatory controls all factor into the pricing formula. States with frequent tornadoes or hailstorms—like Oklahoma—face staggering loss frequency, driving premiums up even faster than wildfire-prone areas.

The takeaway: insurance costs are rooted in math, not mystery. And every state, regardless of its geography, is seeing increases.

3. The Inflation Effect: Why Everything Costs More (Including Insurance)

One of the clearest explanations Susman offers is the direct link between inflation and insurance premiums. “Every state, every city,” he says, “is seeing significant increases in the costs of insurance—not by a little, by a lot.”

He breaks it down simply: insurance companies pay for the same goods and services that the rest of us do. When prices rise, so do claims—and eventually, so do premiums.

Let’s consider just a few inflation-affected categories:

• Construction materials – Lumber, steel, and concrete costs have jumped dramatically since 2020.
• Labor – Contractors, electricians, and auto technicians charge more due to shortages and wage increases.
• Vehicles and parts – Modern cars are more complex, meaning repairs are costlier and take longer.
• Temporary housing – When homes are damaged, the cost of hotel stays or rentals has skyrocketed.
• Food and utilities – These influence loss-related expenses such as additional living costs after disasters.

All of these elements feed directly into insurance claims. When it costs more to repair, replace, or rebuild, insurers must adjust rates to stay solvent. “You can’t say everything costs more but insurance should stay the same,” Susman emphasizes. “It doesn’t work that way.”

Inflation doesn’t just affect individuals—it hits entire economies. Even though U.S. inflation rates are lower than in many other countries, they’ve still caused ripple effects throughout global reinsurance markets. In essence, insurance companies are buying their own insurance—and those costs, too, are up sharply.

4. The Data Behind the Increases

Susman points out that the top 10 states with the highest homeowner rate increases in 2023 were:

1. Florida
2. Louisiana
3. California
4. Texas
5. Oklahoma
6. Kansas
7. Colorado
8. Mississippi
9. Arkansas
10. Missouri

These are not coincidental. They’re the same regions that have faced devastating hurricanes, floods, tornadoes, and wildfires over the last five years. “These states weren’t prepared for the scale of losses they experienced,” Susman says. “Rates were underpriced for years—and now the correction is happening all at once.”

It’s not about punishment; it’s about catching up with reality. As rebuilding costs and catastrophe frequency soar, insurers are recalibrating premiums to align with actual risk exposure. The result is painful—but necessary—for long-term stability.

5. Consumer Power: What You Can Do to Lower Your Premiums

While global factors are beyond any single homeowner’s control, there are practical, evidence-based ways to reduce costs. Susman highlights several strategies that can make a measurable difference.

A. Ask for Every Available Discount

Your insurance agent should be your ally—but they can’t read your mind. Ask one specific question:

“Please give me a list of every discount available for my policy.”

Many consumers discover they qualify for savings they never knew existed—such as bundling discounts, safety upgrades, senior discounts, or loyalty rewards. Some carriers even reward you for installing smoke alarms, water sensors, or burglar systems.

B. Raise Your Deductible (Strategically)

The deductible—the amount you pay out of pocket before insurance kicks in—is one of the most effective levers you control.
A higher deductible means lower premiums. It also discourages small claims, which can raise rates long-term. “Small claims are the bane of both insurers and consumers,” Susman notes. Eliminating those low-value claims helps stabilize the entire system.

C. Adopt Smart Technology

Smart home devices can detect leaks, smoke, or motion before disaster strikes. Products like water sensors, smart thermostats, and earthquake gas shutoff valves are gaining traction. Some insurers even offer discounts for homes with these devices, recognizing their preventive value.

As Susman says, “Insurance carriers and homeowners actually want the same thing—no losses.”

D. Participate in Fire-Safe Programs

In wildfire-prone regions, the Safer from Wildfires program helps homeowners implement resilience measures—fire-resistant roofs, cleared defensible space, and ember-resistant vents. Certified homes not only enjoy better protection but may also qualify for rate reductions.

Susman predicts that homes with fire-safe designations will soon command higher resale values. “It’s going to become a mark of quality,” he says.

E. Avoid Coverage Gaps

Many people unknowingly underinsure valuables like jewelry. As Susman’s conversation with a caller illustrated, standard homeowner policies often limit jewelry coverage to around $1,000–$2,000. Expensive pieces require scheduled coverage (a personal articles floater) and often an appraisal to document value.

The same goes for home-based businesses, collectibles, or short-term rentals—disclose them to your insurer to ensure proper coverage.

6. The Psychological Shift: From Blame to Understanding

Insurance conversations often turn emotional. Rising premiums feel personal, especially when households are already strained. But Susman urges a broader view.

“If we all agree that everything costs more,” he says, “then we have to accept that the one entity buying all those things—the insurer—also has to pay more. And that affects premiums.”

The goal isn’t to justify high prices but to foster understanding. Insurance is a reflection of the world’s economy, not an isolated system. The more consumers understand the relationship between inflation, regulation, and loss costs, the better equipped they’ll be to make informed choices.

7. The Road Ahead: Adaptation and Awareness

The “new normal” in insurance isn’t about defeat—it’s about adaptation. Homeowners can take meaningful steps to protect themselves through education, technology, and proactive communication with their agents. Regulators, meanwhile, must continue balancing affordability with solvency to ensure a sustainable market.

As Susman concludes, “Insurance may not be the most exciting topic, but it’s one of the most important. Understanding what you have—and how it works—can save you a lot more than just money.”

In Summary:
The forces reshaping the insurance industry—climate volatility, inflation, and regulatory reform—are here to stay. But informed consumers have power. By understanding the “why” behind rising premiums and taking advantage of available tools and programs, Californians—and Americans everywhere—can navigate this new normal with confidence and clarity.