WASHINGTON, D.C. – U.S. automotive insurance rates have spiked, with experts saying that the industry has hit its worst point in 30 years and if the situation isn’t addressed soon, motorists could very well be approaching a significant financial crisis when it comes to acquiring affordable coverage for their vehicles.
According to the consumer price index (CPI) for June, auto insurance costs increased a whopping 16.9 percent year-over-year; in addition, a recent J.D. Power study notes that approximately one-third of consumers with automotive insurance policies have experienced an increase in their rates over the past 12 months.
There are numerous factors contributing to this ongoing malady, but the one experts are pointing to the most are the record-high losses that insurers are currently experiencing due to the fact that the costs of fixing or replacing vehicles have skyrocketed in recent years.
These added costs can be attributed to the current 40-year high inflation, disruptions to supply chains caused by the COVID-19 pandemic that are resulting in a scarcity of parts, and a greater degree of costly cutting-edge technology being incorporated into vehicles by manufacturers.
In addition, following the end of COVID, a far greater number of motorists have returned to the roadways, and as a result the number of automotive accidents – and subsequent insurance claims, lawsuits, and medical costs – have not only returned to pre-pandemic levels, but in some instances are even higher now.
As a result, J.D. Power notes that insurers are reporting an average loss of 12 cents for every dollar of premium written in 2022; this is a fact that National Association of Mutual Insurance Companies’ Neil Alldredge wholeheartedly agrees with, saying that “It’s probably the worst period for auto insurers it’s been in 30 years at least.”
To offset these losses, many insurers are increasing their premiums, with some states experiencing higher jumps than others. For example, State Farm customers in Pennsylvania have seen an 8.2 percent increase this year, whereas Louisiana motorists have been hit with a massive 17.3 percent bump.
Reports note that all major insurers have instituted similar premium hikes as well this year.
Christopher Boyle is an investigative journalist, videographer, reporter and writer for SEARCHEN NETWORKS® as well as other independent news and media organizations in the United States. Christopher works on a wide variety of topics and fields, has been featured in print and online in a variety of publications, from local to national, and helps keep a keen-eye on what’s happening in the automotive world for Auto Buyers Market.