Why Insurance Costs are Rising and What Consumers Can Do About It

Staff Report From Georgia CEO

Friday, April 12th, 2024

Across the country, auto insurance premiums are on the rise and many drivers are wondering why their rates have increased.

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The answer is for the simple reason that the cost of the things auto insurance pays for has been rising faster than premiums. This is exacerbated by inflation trends, legal system abuse, and in some states, regulatory uncertainty.

In 2022, auto claim losses and expenses spiked to more than $1.12 for every $1 in premium.   

Some of the key contributors to rising costs include cumulative years of record-high inflation that have greatly increased the cost of repairing and replacing cars. Over the last five years, the cost of car parts and used cars and trucks increased nearly 40 percent and the cost of vehicle repairs increased by more than 20 percent. Other key cost drivers include higher numbers of car thefts and more complex and expensive repairs due to the increasing sophistication of the technology in today's vehicles.

Dangerous driving behaviors are also having an impact on costs. As daily driving patterns and traffic volumes rebound from pandemic lows, traffic fatalities remain alarmingly high. 

Fatal crashes involving risky behaviors like impaired driving and speeding remain an epidemic on our roadways. Data from Cambridge Mobile Telematics, 2023 Distracted Driving Report, found that "distracted driving has increased 23% since 2020, resulting in an additional 420,000 crashes and 1,000 fatalities.

All indicators suggest elevated auto repair and replacement costs will stretch well into 2024 and potentially beyond.

Insurers are urging drivers to reduce their risk by avoiding driving behaviors like distracted driving, speeding, and impaired driving that may result in a crash. Insurers are also advocating for better infrastructure, including reliable supply chains for critical auto parts and safer roads, which should result in fewer crashes, and controlling claims costs to help keep insurance premiums affordable for consumers. By working in partnership with consumers, insurers are committed to giving drivers access to tools and resources, such as telematics or usage-based insurance products, that lower the price of auto insurance and make our roads safer.

5 Consumer Tips to Lower Your Auto Insurance Premiums:

  1. Contact your insurance company or agent for a policy review.
  2. Shop around with other insurers to see if there is a better match for coverage and cost.
  3. Increase your deductible and lower non-essential coverage like glass, rental car, and roadside service.
  4. If you're driving less, consider usage-based insurance.
  5. Ask your insurer if they have billing method discounts or other discount programs

To learn more about what's driving auto insurance costs and ways you can save money, visit: www.apci.org/costdrivers/