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9 months ago · by · 0 comments

Rising Costs, Not Insurer Profits, Drive Auto Rates Higher Says Insurance Information Institute Study

“Keeping expenses low and on budget is a key concern for nearly all Americans, which is one reason why the Triple-I’s article on the nine ways to lower your auto insurance costs is one of the most widely read items at our website each year,” said Sean Kevelighan, CEO, Triple-I. “While it can be seemingly easy to suggest insurance rates are solely a result of a carrier’s desire to make a profit, a fact most in the business already know is that underwriting oftentimes represents a small fraction of operating profit. The study set out to illustrate and explain the real drivers of auto insurance rates, many of which the carrier has absolutely no control.”

The study identifies four factors that drove recent increases in U.S. auto insurer claim payout costs:

Economic Growth – There is a strong correlation between economic activity and driving. During the U.S.’s recession between 2007 and 2009, miles driven decreased substantially nationwide. As the U.S. economy recovered, more drivers returned to the U.S.’s roadways and cumulatively drove more miles. This trend resulted in a greater number of auto crashes, which contributed to higher auto insurance claim payout costs

Collision Repair – The introduction of new automotive technology improved safety (e.g., crash avoidance sensors) and increased fuel efficiency (e.g., replacing steel with aluminum) but also increased the cost of either repairing or replacing damaged vehicles

Distracted Driving – Talking on handheld cell phones and texting while driving leads to more accidents

Medical Inflation – Increases in the cost of hospital care, which grew 4.4 percent in 2018, according to the federal government, put economic pressure on the U.S.’s auto insurers. The study also cites research indicating auto insurers generally incur more expensive types of hospital services or are charged higher prices than other payers for similar services.

Resource:https://www.iii.org/press-release/triple-i-sponsored-academic-study-rising-costs-not-insurer-profits-drive-auto-rates-higher-010720

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Rubix Insurance Solutions
A Subsidiary of Avalue Insurance
Dain Priday

2305 E Arapahoe Rd
Denver, CO 80112

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dain@rubixinsurance.com

(303)-993-3300

Available 8:30am - 5:00pm or by appointment