There are several reasons why insurance professionals should keep an eye on the inflation rate, which hit 8.3% in April 2022, down just slightly from 8.5% the previous month. Both rates represent historically high prices in the U.S. The higher the rate of inflation, the more it will cost insurance companies and agencies to run operations, according to Conning. This could result in lower income ratios, a decrease in reserves and ultimately, higher rates. "Inflation will affect different business lines in different ways," Conning reports. "Using personal automobile as an example for a short-tail insurance, the business will be sensitive to inflation in the future costs of vehicles and as well as medical costs resulting from injuries. Workers' compensation insurance, as a proxy for a long-tail line of business, will not be as sensitive to the changing prices of automobiles but will be impacted by changes in wages, medical expenses and other related costs." Liberty Mutual points out that inflation also adversely impacts individual household spending, which can cause some policyholders to shop around for new coverages. The carrier offers the following tips for policyholders who may experience inflation-driven rate increases:

• Check for any home insurance discounts you may qualify for;
• Explore payment options like automatic payments or paying for the year in full;
• Increase your deductible; or
• Bundle with your auto insurance and save.

Depending on where you live, the impact of the current inflationary boom could be more or less severe. Residents of some states are experiencing a harder time due to inflation than others, according to a recent study by QuoteWizard. Researchers at this insurance shopping website compared the impact of inflation in 2021 versus 2022 by asking people how hard it is to pay their bills. The slideshow above illustrates the states with the greatest amount of change among those experiencing a "very difficult time" paying their bills in 2021 versus 2022. See also:

• Consumer prices growing faster than workers' comp medical costs
• Allstate auto lines suffer as inflation boosts 'all the costs'
• Social inflation is a major driver of commercial auto costs