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What’s Driving Auto Rates?

Auto insurers dealing with the “pandemic price”

Across seemingly every news outlet, it’s hard to escape reports of inflation and rising consumer prices.

And, like other goods and services across the economy, auto insurance rates are a part of the conversation. Currently, many carriers are raising prices to account for unexpected costs—but what’s driving those decisions?

You guessed it. It’s primarily pandemic related, but perhaps not in the ways you might think. As you have conversations with your clients about rising auto insurance costs, the following may help you better explain what’s driving rates to help them better understand the situation.

A return to “normal”

Of course, we’re hardly back to “normal” as the world continues to wrestle with the pandemic, but driving behavior, particularly vehicle miles traveled, has essentially “normalized” and returned to pre-pandemic levels.

At the outset of the pandemic, miles driven dropped, claims fell, and insurers issued refunds/credits, lowered rates, or both. As 2021 unfolded, driving behavior picked up as did claims frequency and, in turn, insurers’ costs.Most auto insurers subsequently found themselves underpriced.

Rising repair and replacement costs

For insurers the past predicts the future. Generally speaking, insurers review historical data and trends to set prices for future expected costs. The pandemic, however, upended expected repair and replacement costs in ways that were challenging to anticipate. Case in point: unpredictable pandemic-related supply chain disruptions and labor shortages have driven claims costs up substantially.2

In fact, the Bureau of Labor Statistics reports that average expenditures for vehicle repairs have risen more than 4% over the last year, while used car and truck prices have skyrocketed by more than 40% over the same period.3

When you combine the uptick in vehicle miles driven and the related increase in claims with rising costs to cover those claims, carriers are paying a “pandemic price” that will affect rates throughout the auto insurance industry in the near term.

How agents can help

Knowledge is power, and while rate increases can be difficult for consumers to accept, as their trusted, expert adviser, you can provide valuable information and context to help your clients understand what’s driving these rate changes.

Consumers choose independent agents for their knowledge and guidance, and in challenging times like these, agents can help clear up confusion, provide expert counsel, and deliver the peace of mind consumers crave in uncertain times.

  1. U.S. Federal Highway Administration, Vehicle Miles Traveled, Monthly Report: June 2021.
  2. Insurance Information Institute, “Auto Insurance Rates Impacted By Labor Crunch, Supply Chain Disruptions,” June 2021.
  3. U.S. Bureau of Labor Statistics, Consumer Price Index, Table 2: July 2021.
  4. Manheim, Used Vehicle Value Index: June 2021.

Article written by: Keith J. Mita, CIC CPCU AICProgressive Insurance Sr. Sales Representative – Personal Lines

How to check if your home or business is on a flood zone

Flooding is a serious problem for home and business owners in Jacksonville, FL. The available flood insurance comes with a 30-day waiting period which might not be helpful if flooding occurs during the waiting period. One of the most common challenges among many homeowners is checking whether their property is in a flood zone. If this is your problem, you’re at the right place. This article will outline various ways you can use to check whether your property is in a flood zone or not.

Check the FEMA flood maps

The Federal Emergency Management Agency (FEMA) has a tool that makes it easier to check whether your home is in a flood zone or not. The flood map shows critical information like floodways, zones and risk levels. The map labels specific areas around your property as areas of minimal flood hazard or annual chance of flood hazard.

Ask your flood insurance provider

Your flood insurance provider already knows your flood risk level. At 925 Partners we require your flood risk information when you buy flood insurance for the first time. In most cases, this information helps to determine your insurance rates.

Track changes in topography

With the growing economy, construction and changes in flood plains and topography, flood zone designations can change over time. If your home was marked as a low-risk flood area five years ago, the changes in your neighborhood could change for the worse.  Check different projects in your area and assess how they affect flood risk levels.

Hire a professional

Reading maps is not enough to determine your flood risk, as they change regularly. Consider hiring a property expert to check the property using the right tools and expertise. It’s even more critical if you suspect you’re buying a property in a high-risk flood area. A licensed surveyor can advise you accordingly or get the home elevated above the flood level.

Need more information about flood insurance or flood risk levels in Jacksonville, FL? Contact 925 Partners for all your flood insurance needs, and we will be happy to help you.

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