The FRED Blog often uses data from the US Bureau of Labor Statistics (BLS): A few years ago, we used their Consumer Expenditures Survey to discuss the preferences for life insurance and other personal insurance services among different population groups. Today, we use data from the Producer Price Index program of the BLS to discuss the premiums charged for some of those services.

The two solid lines in the FRED graph above show the year-over-year percent growth rate in the premiums charged for insuring two types of assets: private automobiles (red line) and homes (green line). The dashed black line is the annual growth rate in the headline property and casualty producer price index, which includes, among others, commercial, medical, and worker’s compensation insurance.

Since 1999, when data are first available, cycles in the growth rate of insurance premiums are easily visible. For example, two distinct periods of fast growth in automobile insurance premiums in the early 2000s and mid-to-late 2010s were followed by periods of much slower growth and even decreases in premium values. So, what can help explain those cyclical fluctuations in value?

The 2023 annual report on the insurance industry by the Federal Insurance Office names several factors impacting the overall financial standing of insurers. Most recently, widespread natural disasters have resulted in large payouts and higher interest rates have decreased the value of fixed-income securities held in this sector’s investment portfolios. To compensate for those losses, insurers have raised their premiums at a pace not recorded in many years.

How this graph was created: Search FRED for and select “Producer Price Index by Industry: Premiums for Property and Casualty Insurance.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Producer Price Index by Industry: Premiums for Property and Casualty Insurance: Premiums for Private Passenger Auto Insurance.” Click on “Add data series” and repeat the previous step to add “Producer Price Index by Industry: Premiums for Property and Casualty Insurance: Premiums for Homeowner’s Insurance” to the graph. Next, select the “Edit Lines” tab and use the “Units” dropdown menu to select “Percent Change from Year Ago.” Lastly, use the “Format” tab to customize the line styles.

Suggested by Diego Mendez-Carbajo.