Recently, Best's Reviews by AM Best published a report on "What's Driving the Rise in Auto Costs. Overall there are many factors contributing to this rise, from increased supply chain costs to mounting claims/losses to deteriorating driving behavior.
Here are a few key takeaways from the Eric L. Ash Insurance Agency on what's driving: an increase in auto insurance rates:
Increased supply chain costs
"Parts across all groups have increased by 20.2% since 2019, according to the CCCIS analysts. The cost of parts related to the windshield have skyrocketed 56.4% in that time period, while materials related to the grille and hood have jumped 36.2% and 35.0%, respectively."
The graphic below shows the percentage of growing repair costs. The most surprising, because of the amount of technology and cameras embedded:
Windshield: 56.4%
Grille 36.2%
A $500 chrome bumper from 5-10 years ago, now costs 5-10x's that amount with all of the technology embedded in parts.
Mounting claims/losses
"...are presenting problems for a private passenger automobile insurance industry that had a net underwriting loss of $33.16 billion in 2022, almost eight times higher than the $4.19 billion seen in 2021, according to the AM Best Special Report 2022 P/C Snapshot: Unprofitable Auto and Property Results Weaken P/C Underwriting Performance. e. In 2020, the industry reported an underwriting net gain of $18.35 billion."
In two short years, going from a underwriting surplus to a net underwriting loss has taken its toll with many insurance carriers limiting the new business they are accepting and underwriting. As we near the end of 2023 and the new year, there is unfortunately no relief in site.
Deteriorating Driving Behavior
"In a recent report that provides telematics applications to insurers, Cambridge Mobile Telematics noted there has been a 23% surge in distracted driving since 2020 and estimated that this resulted in 420,000 additional crashes and 1,000 fatalities in 2022."
These numbers are staggering when you think about the number of distracted drivers on our roadways. Take a moment to reflect on those numbers that's 2.7 deaths per day and more than 1100 accidents a day.
How do we change this behavior? Many of the insurance companies we work with offer driving discounts when an app is tracking your driving (speed, braking, time of day your driving, etc.). This data factors into potential Insurance discounts.
Conclusion
At the Eric L. Ash Insurance Agency, we always work with our customers to review potential discounts available. Some of these discounts to combat higher insurance costs include:
Bundling auto and homeowners insurance
Claims free
Drivers training / schools
Good student
Low mileage
Payments (paid in full discount, EFT discount, etc)
Roof age discount
Telematics
Insurance app for your smartphone that tracks driving tendencies over a period of time to offer potential discounts.
And much more...
Please contact the Eric L. Ash Insurance Agency to prepare individual insurance quotes to fit your specific needs.
The Eric L. Ash Insurance Agency is an independent insurance broker with more than a decade of experience. We work with dozens of insurance carriers to fit your individual insurance needs. Call / Text Us at 412.238.7414 or fill out our contact form online: https://www.ericlashagency.com/contact
FOOTNOTES
Bellano, "What's Driving the Rise in Auto Costs," Best's Review, October 2023, pages 26-28.