Auto insurance premiums are set to skyrocket in the coming months and it’s not just an inflation thing. Through both the US and UK, companies are facing big underwriting losses due to significantly increased claims costs, leaving customers struggling with higher rates. The main driving force of this upheaval is surging used-car prices, which has forced insurers to recalculate their costs. Similarly, repairs alone are becoming more expensive with modern vehicles, as parts and labor become increasingly hard to find, and courtesy rental cars are no exception.
On top of inflated prices, drivers’ careless habits such as driving too fast or not paying attention properly have also played a large role in driving up costs. Unfortunately, theft is now on the rise, further complicating the situation, so some insurers are refusing to cover Hyundais and Kias, Range Rovers and other high-end vehicles that are particularly tempting to criminals.
It should be noted that some insurers, such as Progressive Corporation, have managed to stay ahead of the curve, with their 4% pretax underwritingprofit margin on individually owned cars in the US. In the UK, Admiral Group Plc performed better than Direct Line thanks to its keen awareness of the changing situation.
In the US, the process of raising prices is slowed down due to the required permission from state regulators, which can often be reluctant. In the UK, price-walking is an issue, as insurers must offer existing customers the same rates as those switching providers.
Despite Geico forecasting an underwriting profit for 2023, used car prices remain a problem and thus another difficult year is expected. Auto insurers are only beginning to adjust their prices and customers should brace themselves for further hikes.
State Farm Mutual Automobile Insurance Co. is the US’s largest car insurer. Founded in 1922, State Farm has grown significantly, recently reaching a 100-year milestone. Tom Wilson is the current Chief Executive Officer of Allstate Corp., an auto insurance corporation. He recently spoke of the pandemic-induced problem of drivers arising. Sabre Insurance Group Plc is a UK-based company that is doing its best to address the theft issues found in the luxury SUVs market. With their experience and wisdom in the field, Sabre Insurance Group Plc surely has the tools to help mitigate the effects of this problem.