Auto insurance prices will rise, but insurers will prepare for future cost increases

Employees of a used car dealership will intervene on Thursday, June 10, 2021, as they inspect vehicles moving in rising waters from two days of heavy rain in Lexington, Mississippi.

Rogelio V. Solis | PA

According to Wells Fargo chief executive Ellis Greenspan, the market remains weak despite the recent increase in auto insurance rates.

“The incremental increase has been very modest,” Greenspan said in an interview. “The reason for the significant year-over-year increase is that the May 2020 premium base has been affected by all refunds.”

Auto insurers refunded $ 14 billion in premiums last year, according to the Insurance Information Institute, as the number of consumers driving declined. Prices stagnated throughout the first quarter and even declined.

However, the last Consumer price index According to the data, the May auto insurance index rose 6.4% in April, then 16.9%. This is the first increase since March 2020.

Auto insurers face many challenges as the economy recovers. Workers return to the office, and vaccinations encourage many to take summer vacations. The latest statistics available, government data for March, show an increase of 19%.

Due to the return of people to pre-Covid driving levels, the incidence of car accidents will increase, said Michel Léonard, vice president of III.

With the trend of this year after last year, accidents could be even more serious. Driving hours fell 13% last year, but the number of fatalities rose 7%, according to the National Road Safety Authority. Experts blame the high incidence of speeding, impaired driving while intoxicated and distracted driving.

In addition, according to Leonard, many drivers neglect to train, especially in parking lots and road traffic.

More accidents mean more claims – and those claims are expected to cost insurers more as repair costs rise.

CPI data shows a monthly increase in auto repairs. The 2.8% increase in May was a bit slower than that of last month. (Repair costs rose 3.5% in April and March, 3.1% in February, and 3.5% in January.) In addition, wait times are longer due to shortages of chips, supply chain disruptions and limited workforce. I did.

Yet not all insurers raise interest rates. In Wells Fargo’s analysis, Greenspan was with Hartford. Any state I increased the price in May, Traveler, progressive State Farm saw the price drop. Geico raised its prices in April, but did not submit a price change in May, he said.

“It’s always a good environment for consumers who buy auto insurance,” said Greenspan.

It remains tough on auto insurers until the fall, as commuters return to work, students return to school, and public transportation chooses to drive itself before the pandemic. I’m waiting for him.

“There are a lot of headwinds in terms of severity and frequency,” she said.

Auto insurance prices will rise, but insurers will prepare for future cost increases

Source link Auto insurance prices will rise, but insurers will prepare for future cost increases

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