An anonymous reader shares a report: It’s getting to be a bit much. Auto insurance prices have surged over the last couple years. March consumer inflation out Wednesday shows them up 22% compared to last year. Since the end of 2019 — just before Covid hit — they’re up 45%.
Why? That’s where things get complicated. In a prophylactic press release released Wednesday morning, an insurance industry trade group cited “greatly increased the cost of repairing and replacing cars” due to inflation. As anyone who has shopped for a new or used car over the last couple years can tell you, costs have gone up. That goes for the costs of replacing minor parts like bumpers or mirrors as well.
Insurers lost a lot of money on those replacement costs in 2021 and 2022, and are now trying to make that money back by raising rates a lot.
Then there’s also the the objectively atrocious driving record of Americans. Even before the pandemic, Americans were awful drivers compared to other high income countries, with auto death rates the highest among peer nations. High accident rates are reflected in higher costs of insurance. And of course there’s also the old-fashioned profit motive. Insurers are trying to make money and raising rates is the way to do it.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.