{"id":106,"date":"2022-02-15T09:29:40","date_gmt":"2022-02-15T15:29:40","guid":{"rendered":"https:\/\/www.925partners.com\/blog\/?p=106"},"modified":"2022-02-15T09:29:41","modified_gmt":"2022-02-15T15:29:41","slug":"whats-driving-auto-rates","status":"publish","type":"post","link":"https:\/\/www.925partners.com\/blog\/whats-driving-auto-rates\/","title":{"rendered":"What’s Driving Auto Rates?"},"content":{"rendered":"\n

Auto insurers dealing with the \u201cpandemic price\u201d<\/strong><\/p>\n\n\n\n

Across seemingly every news outlet, it\u2019s hard to escape reports of inflation and rising consumer prices.<\/p>\n\n\n\n

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\u2014but what\u2019s driving those decisions?<\/p>\n\n\n\n

You guessed it. It\u2019s 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\u2019s driving rates to help them better understand the situation.<\/p>\n\n\n\n

A return to \u201cnormal\u201d<\/strong><\/p>\n\n\n\n

Of course, we\u2019re hardly back to \u201cnormal\u201d as the world continues to wrestle with the pandemic, but driving behavior, particularly vehicle miles traveled, has essentially \u201cnormalized\u201d and returned to pre-pandemic levels.<\/p>\n\n\n\n

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\u2019 costs.1 <\/sup>Most auto insurers subsequently found themselves underpriced.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Rising repair and replacement costs<\/strong><\/p>\n\n\n\n

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<\/sup><\/p>\n\n\n\n

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<\/sup><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

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 \u201cpandemic price\u201d that will affect rates throughout the auto insurance industry in the near term.<\/p>\n\n\n\n

How agents can help<\/strong><\/p>\n\n\n\n

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\u2019s driving these rate changes.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

  1. U.S. Federal Highway Administration, Vehicle Miles Traveled, Monthly Report: June 2021.<\/em><\/li>
  2. Insurance<\/em>\u00a0Information<\/em>\u00a0Institute,<\/em>\u00a0\u201cAuto<\/em>\u00a0Insurance<\/em>\u00a0Rates<\/em>\u00a0Impacted<\/em>\u00a0By<\/em>\u00a0Labor<\/em>\u00a0Crunch,<\/em>\u00a0Supply Chain Disruptions,\u201d June 2021.<\/em><\/li>
  3. U.S. Bureau of Labor Statistics, Consumer Price Index, Table 2: July 2021.<\/em><\/li>
  4. Manheim,<\/em>\u00a0Used Vehicle Value Index: June 2021.<\/em><\/li><\/ol>\n\n\n\n

    Article written by: Keith J. Mita, CIC CPCU AIC<\/strong> – Progressive Insurance Sr. Sales Representative – Personal Lines<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    Auto insurers dealing with the \u201cpandemic price\u201d Across seemingly every news outlet, it\u2019s 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\u2014but what\u2019s driving those […]<\/p>\n","protected":false},"author":2,"featured_media":104,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[10,21,12,19,14],"class_list":["post-106","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-auto-insurance","tag-925-partners","tag-auto","tag-florida","tag-insurance","tag-rates"],"_links":{"self":[{"href":"https:\/\/www.925partners.com\/blog\/wp-json\/wp\/v2\/posts\/106","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.925partners.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.925partners.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.925partners.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.925partners.com\/blog\/wp-json\/wp\/v2\/comments?post=106"}],"version-history":[{"count":1,"href":"https:\/\/www.925partners.com\/blog\/wp-json\/wp\/v2\/posts\/106\/revisions"}],"predecessor-version":[{"id":109,"href":"https:\/\/www.925partners.com\/blog\/wp-json\/wp\/v2\/posts\/106\/revisions\/109"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.925partners.com\/blog\/wp-json\/wp\/v2\/media\/104"}],"wp:attachment":[{"href":"https:\/\/www.925partners.com\/blog\/wp-json\/wp\/v2\/media?parent=106"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.925partners.com\/blog\/wp-json\/wp\/v2\/categories?post=106"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.925partners.com\/blog\/wp-json\/wp\/v2\/tags?post=106"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}