car insurers are filing for rate increases or plan to, as claim costs increase from collisions, repairs and from severe weather, according to companies, diligence experts and express rate filings .

Key Takeaways

  • Insurers like Travelers and Allstate are filing or planning to file for personal auto rate increases in the fourth quarter 2021 through next year
  • Rate increases are largely in the single digits, although companies are indicating they should be higher to reflect losses
  • Factors contributing to higher losses requiring higher premiums include environment, reckless driving, supply chain disruption
  • Coverage areas seeing higher need for premium boosts include boldly injury and uninsured motorists
  • All companies are seeing claim increases, industry expert says

40-state plan for rate hikes

In a call with investors to discuss earnings Oct. 19, The Travelers Cos. announced it would be filing rate hikes in about 40 states through mid-year 2022, with higher rates in plaza by year-end. Michael Klein, president, personal policy, for Travelers stated on the call that there were higher loss levels from Hurricane Ida coupled with the fact that claim frequency was “ effectively returning to pre-pandemic levels. ” The September hurricane and tropical storm resulted in the deluge of possibly 212,000 vehicles according to CARFAX. That does not include the 378,000 flood-damaged cars that CARFAX data shows were already on the road in 2021, it stated .

In a research note, equity analysts at Evercore ISI expressed storm at Travelers presentation noting that personal car frequency was back at pre-pandemic levels given that miles drive are however down from 2019 levels but said it through Travelers sounded confident it would get its increases approved by country regulators .

frequency and asperity rising

The badness and frequency of car incident claims determines the rates requested or set by car insurers in states .

In holocene state filings reviewed, companies are indicating they need higher rates due to greater losses in the coverage areas of boldly wound, collisions and uninsured motorists. But every company is reporting higher claims, says Brian Sullivan, editor program, Risk Information Inc., publisher of the Auto Insurance Report .

For model, Allstate Fire and Casualty Insurance Co. filed a document Oct. 19 with Texas regulators stating an 8.5 % overall increase for individual passenger car policyholders in Texas was indicated, with a maximum have a bun in the oven shock of 23.1 % .

however, the insurance company said that a larger 35.5 % overall increase was actually the measure needed to reflect expect losses ; some state regulators and insurers don ’ triiodothyronine want to hike rates excessively high from current premiums, to avoid disrupting consumers financially .

Bodily wound, uninsured motorist and property damage claims wax

Bodily injury, uninsured motorist coverage costs and property damage costs weighed heavily on the want for higher rates, according to the insurance company ’ randomness Oct. 19 filing, a composition repeated in other insurers ’ filings .

“ After experiencing more than a year of limited contact and economic activity, we have begun to see a return to driving action and losses that are approaching pre-pandemic loss levels and trends. In holocene months, we have seen a rapid return towards normal driving patterns as inoculation levels have increased and infection rates have dropped, ” Allstate told Rhode Island regulators in a recent file. other Allstate consort companies filed at the same time for rate increases in Texas. with indicate and actually needed rate increases in the single digits .

severity increases that began rising the irregular one-half of 2020 for most car coverages “ have however to moderate, ” Allstate wrote .

not an October surprise

other insurers are requesting or filing rate hikes in other submit, american samoa well .

  • Geico filed earlier this month for an 8.3% overall increase in rates in Maryland, citing higher indications in bodily injury and uninsured motorist coverages. 
  • Old Dominion Insurance Co. has proposed a rate change for an overall 6% before and after rate stabilization, although an overall rate increase of 9.4% was indicated, it said. 
  • Shelter Mutual Insurance Co. filed in Louisiana, already the most expensive state for auto insurance, stating a 18.8% rate increase was indicated from losses, which were steeper in bodily injury, uninsured motorist and comprehensive coverages.  
  • Safe Auto Insurance Co. filed in Ohio for a 5% premium raise fr private passenger auto coverage, effective this fall.

While few insurers opened up about their project rate increases, State Farm spokesman Justin Tomczak notes that although State Farm is unable to speculate about future rate adjustments, its rates remain below pre-Covid-19 levels even though miles drive and claim volume have increased .

No relief in batch

frequency of claims from car accidents and other losses fell during the pandemic and car insurers actually rebated premium dollars back to customers. This policy relief generally reduced premiums by 15 % −25 % for one or more months during the jump of 2020, according to the National Association of Insurance Commissioners, resulting in $ 10.5 billion in refunds, discounts, dividends, it said, crediting the Insurance Information Institute. Since them California ’ s lead insurance governor has demanded more in refunds .

hazardous business

however, as the roads opened up, people drove a lot faster, leading to bigger crashes and frankincense more badness in claims, the diligence publisher Sullivan says .

Severity has already been rising for respective years as cars become more complex and dearly-won to repair, he adds .

Speeding demeanor has remained flush as miles drive has risen, Sullivan says .

” It has become a habit. When you mix higher speeds with increasingly congested roadways, you can see more accidents, ” Sullivan says. Others in the industry besides point to reckless behavior and gunning through red lights as proceed post-shutdown behaviors .

More than any other chemical element, speed affects the severity of a crash, and 2020 trends are not encouraging on that front, according to industry experts. They point out that speeding tickets are up on state roads coupled with more distracted drive and afflicted driving, including from cannabis equally well as alcohol .

supply chain issues lead to longer fixes, lease times

Another factor in the increased cost of claims are provision chain issues, according to experts Insurance Information Institute spokeswoman Loretta Worters says the issues are driving up the price of car parts, including the microchips needed in technology features of cars .

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