Personal Insurance

Distracted Driving & Car Insurance Rates

By March 1, 2017 March 9th, 2018 No Comments
distracted-driving

Market Update: While most clients have experienced favorable renewal terms over the past year, one type of insurance coverage has gotten their attention: auto.  Whether personal or commercial, the auto line has presented issues for many insurance companies, and as a result clients should expect to see rate increases going forward.

What is causing this trend?

There are industry-wide profitability challenges in the auto insurance space.  Insurers have experienced increases in claim costs.  We can attribute these increases to the following causes:

  1. More traffic.  Vehicle miles driven increased 3% in 2016, and recently reached an all-time high.  More miles driven means more chances to have a claim.
  2. Distracted driving.  This alarming trend may be the #1 contributing factor to rate increases.  25% of accidents involve drivers texting or using a cell phone.
  3. Higher medical costs.  Medical costs have increased at 150% the pace of other costs (Consumer Price Index).
  4. Increasing accident frequency and severity.  Higher claim costs can come from either more crashes, or more expensive crashes.  Recently, we have seen both.  The effect is multiplied.
  5. Rising auto repair costs.  Newer vehicles are much more expensive to repair.  Even seemingly small accidents can be very costly.  Years ago a minor accident may have involved repairing a bumper.  Today that bumper may include back-up sensors, airbag sensors, and other expensive systems that lead to higher repair costs.

Fortunately, you may have options to reduce your auto insurance costs through fleet management tools, telematics, and new rating plans.  Contact your Evarts Tremaine Account Manager today to learn how you could benefit.