Thrifty Banker
  • Politics
  • Business
  • World
  • Investing
  • Politics
  • Business
  • World
  • Investing

Thrifty Banker

Business

Burning rubber: How auto insurance prices have fueled inflation

by April 11, 2024
April 11, 2024
Burning rubber: How auto insurance prices have fueled inflation

Wednesday’s inflation report showed consumer price growth continues to drift higher.

The Bureau of Labor Statistics reported price growth accelerated to 3.5% in March, from 3.2% in February.

Few categories had as big a jump year on year than auto insurance, which soared 22% from March 2023, the most significant year-on-year jump in that category since 1976.

And over the last few years, average auto insurance rates have surged 43%.

As of April, the national average cost of car insurance is $2,314 per year for full coverage and $644 per year for the bare minimum, according to Bankrate.

That works out to about $193 a month for full coverage and $54 for minimum coverage.

A host of factors determine how much insurance companies charge drivers, but the cost of nearly all of them seem to be increasing.

One major factor is simply the rising cost of modern vehicles themselves. Today, a new vehicle costs about $10,000 more than it did before the pandemic. Blame supply-chain issues that drove up the cost of vehicle parts, increased labor costs and customer demand, which has naturally pushed prices upward.

The increasing sophistication of the technology in today’s vehicles also contributes to rising costs, said Robert Passmore, department vice president of personal lines at American Property Casualty Insurance Association. Cameras and sensors, which are used for various driver-assistance technologies, like emergency braking, automated parking and blind-spot monitoring, require parts that are more expensive to replace. They’re also subject to higher labor costs, Passmore said.

More complex and expensive repairs are also taking longer, and that shows up as higher vehicle costs, Passmore said. And worker shortages have resulted in higher pay for technicians.

Meanwhile, the higher cost of buying a vehicle has prompted some drivers to hold on to their existing cars for longer. As a vehicle ages, the likelihood of breakdowns rises, increasing the demand for repair services, said Sarah House, managing director and senior economist at Wells Fargo.

“Insurers are trying to recoup very costly claims,” House said.

Other factors are at work, too. According to the Insurance Information Institute, which represents insurance companies and the insurance industry, the severity of claims, including the medical and litigation costs that arise in claim disputes, are also on the rise.

In the years immediately after the outset of the Covid-19 pandemic, insurance companies took large losses — due in part to an increase in bad driver behaviors. As a result, they have pushed state regulators, who determine how high rates can go, to allow them to charge higher premiums while, in some cases, threatening to leave states entirely if they don’t. According to S&P Global Market Intelligence, those companies have been able to win huge rate increases as a result.

The bad news is there is no end in sight to the cost pressures.

Insurance companies filed for rate increases throughout the end of 2023 and at the start of this year, Bankrate analyst Shannon Martin said in an email. Because such rate changes hit auto policies only upon renewal, U.S. drivers are just starting to feel the impact, Martin said.  

“Car insurance inflation is sticky, and while inflation has slowed down and supply chain issues are improving, the premium increases we are seeing and will continue to see in 2024 are based on losses carriers experienced over the last few years,’ Martin said.

‘The ultimate goal is for rates in the insurance industry to stabilize, but that might not happen until sometime next year.”

This post appeared first on NBC NEWS
0
FacebookTwitterGoogle +Pinterest
previous post
DY6 Metals
next post
Trump Media stock erases all gains since it began trading as DJT shares fall again

Related Posts

ESPN plans to add user-generated content to upcoming...

February 21, 2025

Blue-collar hiring and pay gains stay hot in...

December 13, 2023

Hasbro forecasts as much as $300 million impact...

April 26, 2025

Amazon taps Xbox co-founder to lead new team...

May 31, 2025

FTC asks to delay Amazon Prime deceptive practices...

March 13, 2025

Walmart to close 51 clinics as it shutters...

May 1, 2024

Paramount ends DEI policies, cites Trump executive order

February 28, 2025

Mortgage demand drops to 27-year low despite drop...

September 7, 2023

Elon Musk’s AI startup now valued at $24...

May 28, 2024

Elon Musk and Sam Altman spar over Trump’s...

January 25, 2025

    Sign up for our newsletter to receive the latest insights, updates, and exclusive content straight to your inbox! Whether it's industry news, expert advice, or inspiring stories, we bring you valuable information that you won't find anywhere else. Stay connected with us!


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Popular

    • 1

      Top 10 Countries for Natural Gas Production (Updated 2024)

      April 6, 2024
    • 2

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 3

      Top 10 Uranium-producing Countries (Updated 2024)

      April 18, 2024
    • 4

      A GOP operative accused a monastery of voter fraud. Nuns fought back.

      January 3, 2025
    • 5

      Top 9 Nickel-producing Countries (Updated 2024)

      April 23, 2024
    • 6

      Australian abolitionist, Grace Forrest, receives coveted ‘Freedom from Fear’ award

      April 13, 2024
    • 7

      LME Sanctions on Russian Metal Push Copper, Nickel and Aluminum Prices Higher

      April 17, 2024

    Categories

    • Business (1,032)
    • Investing (2,050)
    • Politics (2,977)
    • Uncategorized (20)
    • World (3,351)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: thriftybanker.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 thriftybanker.com | All Rights Reserved