Auto Insurance — Another Insurance Crisis

In some states, personal lines insurance is in crisis mode. The PIA Western Alliance state of California is one of them. Homeowners insurance there is in major crisis. So is auto.

That said, auto insurance is a crisis just about everywhere else, too.

A survey from the auto app, Jerry found that 75% of us think auto insurance is becoming unaffordable. It’s a 40 year high. The “why” is found in the average price hike for auto insurance for 2023.

From December of 2022 to December of 2023 rates rose 20.3% The Bureau of Labor Statistics says it is the 16th straight month that gains have exceeded 10%.

The high costs have 22% of drivers in the U.S. buying less coverage than they want or need.

Breaking down the generations:

• 40% of Generation Z (born 1997 to 2012) drivers bought less insurance than wanted or needed
• Generation X (1965 to 1980)
• The baby boomer number is 20%

Even though prices are skyrocketing, Jerry found it surprising that less than 40% are going insurance shopping for lower rates.

Many drivers, says Jerry VP of insurance operations, Josh Damico, are looking at using telematics to lower their premiums.

• 54% said they will be willing to do telematics to get lower rates
• 52% said they’re willing to switch insurers if their provider forced them to do telematics

The big problem — Damico said — is loss ratios. Many insurers are losing too much money. He hopes easing inflation will cure that problem.

“California, for example, is a state where some insurance companies stopped or extremely limited policy sales,” he said. “As more insurers become confident in their rate levels and reenter the market, we should see a return to a normal and healthy marketplace environment, which generally equals more choices and competitive pricing for customers.”

Most insurers will be able to price their product in a more affordable way by mid-2024. However, Damico said in the meantime, many policyholders will see renewal rate increases much higher than they want.

Source link: PropertyCasualty360.com — https://bit.ly/48QkUIA

Source link: Insurance Journal — https://bit.ly/48UQaq5