By Kate Kelly The handmade goods industry is growing fast and with it, the cost of premiums.
In 2017, consumers spent $4.7 trillion on handmade goods and apparel, according to the Insurance Information Institute.
That’s an increase of over 30 percent from 2016.
But the growth has come at a cost.
For one thing, the industry is now more competitive than ever, according the International Federation of the Manufacturers of Home Goods and Home Decor, an industry association.
“The cost of insurance has gone up because of the growth in the industry,” said Robert Bierman, the CEO of the International Association of Home Decors.
In fact, insurance premiums for the last six months of 2017 have risen by 17.8 percent, he said.
While the industry has been growing in popularity for years, it is starting to face challenges.
“Home insurance companies are becoming more aggressive in their efforts to generate revenue,” said Jonathan D. Hirsch, an insurance expert at the University of Chicago Booth School of Business.
“Insurers are increasingly focusing on higher-end homeowners and other higher-income buyers.
The high cost of homeowners insurance has been one of the main drivers of the industry’s slow growth.”
That trend is reflected in a number of different statistics that show that the number of insured homes has fallen by nearly half since 2016.
For instance, in 2017, home owners paid an average of $5,839 per year for their insurance, compared to $10,095 for non-homeowners.
Meanwhile, the average annual home loss, according an analysis by the Federal Reserve Bank of Dallas, fell by nearly $2,000 since 2016, and homeownership fell by more than $5 billion in 2017.
The biggest risk is that homeownership is falling.
According to the National Association of Insurance Commissioners, just 20 percent of homeowners are currently paying their mortgages on time, while another 22 percent have loans that will run out in 10 years, according a recent report from The New York Times.
That means homeowners are not necessarily able to stay in their homes and pay down their debts when they need to.
And when those debts go unpaid, they may need to seek help from an insurer, said Hirsch.
That can be a tough sell for many homeowners who are still paying down their mortgage, which is often the first line of defense when their credit is at risk.
Even if homeownership has been on the decline, they’re still spending a lot of money on insurance.
According the Insurance Industry Association, homeowners spent $8,000 on their insurance in 2016, compared with $9,000 in 2007.
And that was before the Great Recession hit.
But as the industry grows, homeowners’ spending is expected to continue to increase, according that same report.
According Bierma, insurers are also taking advantage of lower rates.
“As more and more homeowners take on their risk with more and better coverage, premium increases are likely to be higher in the years ahead,” he said, referring to the cost increases that insurers pay to insure their homeowners.
The Insurance Information Foundation says that the average premium increase for the first six months in 2018 was $2.3 million, up from $1 million in 2017 and $2 million in 2016.
And according to Biermen, insurance companies could be on the hook for an average annual premium increase of about 15 percent, which could add up to about $20 billion in 2018.
“If we don’t make progress in reducing the costs of homeowners, the trend of higher rates and lower premium growth is going to continue,” said Huchman.
The trend could also lead to a spike in insurance claims.
In a survey of more than 700 insurance companies, nearly half of them said they are seeing more claims than they were before the recession.
And as the cost is still growing, that could lead to higher rates, said Dierman.
“It will drive up premiums for everyone,” said Diderman.