Premiums Already Skyrocketing as Auto Insurers Face 'Worst Period' in 30 Years
Car insurance rates are in the fast lane with no end in sight.
“Unrestrained rate hikes are hitting the pocketbooks of Americans, and those least able to pay are seeing the worst burden,” said Carmen Balber, executive director of consumer group Consumer Watchdog, according to the Wall Street Journal.
The report said increases include a 40 percent hike from Allstate in Georgia, a proposed 32 percent increase in California by Nationwide Mutual Insurance, and an 11 percent increase by State Farm in New York State.
Overall, auto insurance premiums rose 17 percent year-over-year as of May, well above the overall 4 percent rate of inflation.
The blame is being hung on rising costs that include repairs, higher medical costs for injuries, a rise in post-pandemic accidents, and more lawsuits.
“Everything associated with repairing is going up,” said Stephen Crewdson, a senior director of insurance business intelligence at consumer research company J.D. Power, according to The New York Times.
“It’s probably the worst period for auto insurers it’s been in 30 years at least,” said Neil Alldredge, chief executive of the National Association of Mutual Insurance Companies, according to the Journal report.
The Journal reported that State Farm, the nation’s top insurer, lost 28 cents for every dollar written in 2023, ending up with a $13 billion underwriting loss for car insurance.
“Rates need to rise probably 5 to 10 percent in each of the next couple of years because the loss trends have gone up so much,” said Dale Porfilio, chief insurance officer at industry group Insurance Information Institute.
Regulators have pushed back. In New York state, Geico wanted an increase of 11.1 percent and was allowed to hike rates by 6.8 percent. State Farm, which will hike rates by 10.6 percent, initially asked the state to increase rates by 12.5 percent.
In North Carolina, the state’s insurance commissioner called a hearing in response to a request to raise rates by 28.4 percent. Georgia lawmakers approved a new law that gives state government more clout when reviewing rate hike requests.
California did not grant any rate increases between March 2020 and last fall.
Denneile Ritter, a vice president at the American Property Casualty Insurance Association, said the delay in raising rates made the current increases larger.
Michael Soller, California’s deputy insurance commissioner, said the insurance companies did not ask for rate hikes.
A report from The New York Times estimated that the average national premium is around $2,000.
However, there is a lot of variation, according to ValuePenguin, which said rates overall will rise 8.4 percent this year.
Michigan rates averaged $4,788 a year, it found, with Florida coming in second at $2,856 per year followed by Rhode Island at $2,748 per year.
Vermont was at the low end with an average premium of $1,104 per year, just below Maine, which was at $1,116 per year. Idaho was the third-lowest at $1,188 per year, the site said.
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