We are hearing this from many of our clients and they are right – auto insurance rates ARE increasing. The reason is that auto insurance loss trends are outpacing rate increases. Insurance carriers have been raising rates for a few years now, but it’s just not enough – at least not through 2016. The industry does expect these trends to improve slightly in 2017, but unfortunately, carriers are still trying to figure out why their sophisticated data analytics around risk selection, price segmentation and predictive claims models isn’t working any longer.
So if it feels like your auto insurance rates are on the rise, they most likely are and here’s some reasons why:
People are driving more – we drove 3.148 trillion miles in 2015, up 3.5% from 20141. More miles driven means more cars are on the road and this leads to a higher probability of accidents.
Bodily injury claims have risen 32.1% between 2005 and 20132 – This is attributed in part to an increase in accident severity and cost of medical care.
Distracted drivers – 87% of drivers say they engage in risky behavior behind the wheel, 70% admit to talking on their cell phone while driving and 42% say they read text or emails while driving3.
Cell phone usage – 1 in 4 car crashes involve cell phone use4.
New Vehicle Technology – Newer cars make driving easier and more fun but all this advanced technology is expensive to repair after a collision. None of these features were available 20 years ago and are now becoming mainstream: backup cameras and lasers, night vision with pedestrian detection, automatic high-beam control, electronic dashboards that can wirelessly stream calls, data and text messages from cell phones, side mirror intuitive parking assist, etc. The average repair cost for automobiles involved in accidents rose 19.3% from 2009 to 2016, and 3.8% in 2016 alone5.
At The Partners Group, we can’t predict where auto insurance rates will go from here, but we can help you weather this insurance storm. Now is a perfect time to meet with your agent for a complete household review to make sure you are getting the best value for your premium dollar. We will also look for additional discounts you might be eligible for and make recommendations that could save you money.
Managing Director, Personal Lines
Founded in 1981, The Partners Group has been serving the financial and insurance needs of employers, medical professionals, and successful individuals for over 35 years. We are an independent consulting firm with services including employee benefits, business consulting, retirement planning and investment services, commercial and individual insurance. The Partners Group has offices in Bellevue, WA; Portland, OR; Lake Oswego, OR; Bend, OR; and Bozeman, MT. For more information, please visit https://www.thepartnersgroup.com. 800-722-6339.
- US Department of Transportation’s Federal Highway Administration
- Insurance Research Council
- AAA Foundation Report
- National Safety Council estimate
- CCC Information Services