Inflation is accelerating across the country while others in the West are starting to moderate, a growing concern. In this context, one of your most expensive financial commitments has just changed forever. Experts are very concerned about what is happening with auto insurances, and it seems that the situation is going to get worse (not only in economic terms, you will see now).
Auto insurances, a reason for concern in the United States: attention to what you´ll pay
Auto insurance rates are trending up after the last year, and this alarming development has generated a lot of worry among insurance industry experts. Previously, the number of accidents had gone down as people drove less during the pandemic.
But they now all are on the rise and the crash rate is alarmingly skyrocketing all over the country. Experts are going to believe that the increasing rates are one of the key factors which are making the expenses of the driving unaffordable to a lot of people when inflation is putting a lot of strain.
State disclosures of the U.S. auto insurance premiums that have escalated nationwide by more than 15% in the last year also suggest average consumer cost increases. In addition to this, other states have witnessed not only higher rates but also higher rates than before as the spike ranges from 25-30%.
There´s reason for concern: auto insurances will skyrocket because of these keys
After several years of relatively stable or even decreasing rates, auto insurance premiums are once again on the rise across much of the United States. Experts point to a few key factors driving this concerning trend:
- Accident rates returning to pre-pandemic levels. During the height of the COVID-19 pandemic in 2020, roads were emptier and accident rates plummeted. This led many insurers to lower rates or offer discounts.
- More distracted driving. Smartphones and in-vehicle infotainment systems contribute to distracted driving, which increases accident risk. Some studies suggest over 50% of teen drivers text while driving.
- Inflationary pressures. From replacing damaged vehicles to covering medical bills, insurers are seeing claims become more expensive due to high inflation. Parts shortages also drive up vehicle repair costs. Insurers pass these higher costs onto customers through rate hikes.
Regional differences, to explain why auto insurance´s costs are increasing
Certain states are experiencing more disproportionate increases in their auto insurance bills compared to other states. For instance, Florida was one of the states that experienced some of the highest hikes at more than 30% over last year’s setting.
This effect may well be the result of multiple factors captured in more drivers back on the road after pandemic tourism restores, distracted driving, uninsured motorists and an increased number of insurance claims.
On the other hand, other southern states such as Louisiana, Mississippi, and, South Carolina are also recording absolute disproportionate figures of between ten and twenty percentages. Different from this, there were certain states of mid west, such as Ohio and Michigan.
These states only had a higher single-digit rise amount. Localization aspect appears to be significant since sea tourist regions, states that have a high level of congestion and accident rates are the ones that bear the cost of the increase in premiums.
It is clear that auto insurances will continue to get more expensive as long as the COLA remains subdued, perhaps more than the industry would like. This was one of the forecasts of the IMF and the international insurance industry last year, and it seems to be reaffirmed this year. In any case, we do not expect the situation to worsen too much, although it will continue to do so until the last quarter.
