A look into the 2023 Personal Auto Insurance market challenges and how to leverage your broker.
For a market that is generally stable, the Personal Auto Insurance market is battling some of the worst underwriting results in two decades. Due to the lack of underwriting profitability and higher-than-average loss, drivers will see significant rate increases in auto insurance premiums for 2023 and potentially 2024. Those with a history of auto claims are likely to experience an even more significant rate increase.
Statistics
- Private passenger collision claims rose 36.5% between the first quarter of 2020 and the first quarter of 2022
- Private passenger auto liability loss ratio rose 11% from 60.1% to 71.5% year-over-year
- Motor vehicle parts and equipment are up 15% year-over-year in the first half of 2022, according to the U.S. Bureau of Labor Statistics
- Catalytic converter thefts are up significantly more in 2022 than in previous years. Insurance claims for catalytic converter thefts increased from 16,660 claims in 2020 to 64,701 in 2022, according to the NICB National Insurance Crime Bureau
The driving factors for the poor 2023 results
- Rising insurance losses due to increasing accident frequency and severity
- More fatalities and injuries on the road, leading to increased attorney involvement in claims
- Supply-chain issues, the rising cost of labor and replacement parts
- More costly auto repairs due to more sophisticated vehicles and technology
- Increase in non-accident-related claims such as catalytic converter theft
To remain profitable, insurers must set premiums at levels appropriate to the risks they cover. Auto premium rates reflect a range of factors related to the vehicle such as policyholder, location, vehicle use, and other factors that contribute to an insurer's loss experience.
During the pandemic, auto insurers anticipated fewer accidents amid the economic lockdown and gave back money to policyholders. And while the personal auto loss ratios fell briefly and sharply in 2020, they have since jumped to exceed pre-pandemic levels.
What this means for your rate
On average, drivers will spend 7% more, or $1,895 during 2023 for the same auto coverage they had at the end of 2021, according to a recent Insurify report.
Mitigation Strategies
The amount of money you could save and the programs you are eligible for are different with every policy. Now is the time to work with your broker to re-evaluate your policy to ensure it takes full advantage of any programs you qualify for to help lower your premiums.
Tips to consider when shopping for Auto Insurance
- Consider a Multiple-Policy Discount
- Drivers who insure all of their vehicles on one policy save money
- Consider bundling your Homeowners and Auto insurance (this option could save you as much as 20-25%)
- If you can, leverage your clean driving record
- Look into Student Discount
- Explore a Usage-Based Driving Program: this program uses telematics to determine driving behavior and frequency in two ways:
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- Driving Based measures factors like how hard and how often you break, how quickly you accelerate, and the time of day you drive. This program provides a number of benefits including discounted premiums, safer driving, improved habits, and tracking to help with accidents
- Mileage-Based measures how many miles you drive
- Benefits of Usage-Based Insurance rewards drivers for choosing a program that accurately reflects their driving habits and therefore making it more likely their premium will be accurate
- Match your vehicle to your budget
- Talk to your broker before purchasing a new-to-you vehicle to get an understanding of the cost that will come along with a specific vehicle
- When shopping around consider vehicles with a lower MSRP -higher-value vehicles are more expensive to replace and repair
Leverage your broker
Although insurers are looking to offset high costs with higher premiums, insurance shoppers still have a few options when it comes to bringing down their premium costs. Now it is more important than ever to leverage your broker's knowledge and a more strategic approach to your renewal. Looking to learn more about custom solutions to lowering your auto insurance premiums? The experts at RBN are here to help you review your policies for the best coverage at the lowest premium rate.