• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Editor's Pick Burning rubber: How auto insurance prices have fueled inflation
Editor's Pick

Burning rubber: How auto insurance prices have fueled inflation

by April 11, 2024
by April 11, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

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
You Might Also Like
  • Soracom, UnaBiz Launch Jointly Developed LTE-M IoT Button
  • DOGE plans to wind down consumer protection agency and fire nearly all staff, employees say
  • Trial of former FTX head Sam Bankman-Fried set to begin Tuesday
  • GM lays off 1,000 employees amid reorganization and cost-cutting
Share
0
FacebookTwitterPinterestWhatsapp

previous post
South Korea’s prime minister and top presidential officials resign en masse
next post
2023 Q4 Earnings Analysis and Projections Through 2024 Q4

You may also like

Peloton shares fall after it posts wider-than-expected loss, falling sales...

August 24, 2023

Top adviser recommends against Elon Musk’s $56B Tesla pay package

June 1, 2024

What is Observability and Why is it Important?

December 28, 2022

Buy Buy Baby stores set to shutter as Go Global’s...

July 16, 2023

Nintendo Switch 2 retail preorder to begin April 24 following...

April 20, 2025

Shredded cheese recall over listeria concerns in 15 states affects...

March 9, 2024

Disney says about 157 million global users are streaming content...

January 10, 2025

USDA documented insects and slime at Boar’s Head plants, records...

January 15, 2025

What Role Does Knowledge Management Play in an Organization?

December 3, 2022

New inflation data to reveal consumer strength amid highest interest...

October 12, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


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

    Recent Posts

    • How to Find Compelling Charts in Every Sector

      July 10, 2025
    • White House accuses Powell of mismanaging Federal Reserve, citing headquarters renovation

      July 10, 2025
    • Italian chocolate giant Ferrero to buy Kellogg’s Froot Loops maker

      July 10, 2025
    • OpenAI to release web browser in challenge to Google Chrome

      July 10, 2025
    • Sports executive charged with bid-rigging in Texas arena project

      July 10, 2025

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 3,631 views
    • 2

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,919 views
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,607 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,577 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,451 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,171)
    • Investing (538)
    • Stock (2,662)

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 2

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

      June 27, 2024
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • How to Find Compelling Charts in Every Sector

      July 10, 2025
    • White House accuses Powell of mismanaging Federal Reserve, citing headquarters...

      July 10, 2025
    • Italian chocolate giant Ferrero to buy Kellogg’s Froot Loops maker

      July 10, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,171)
    • Investing (538)
    • Stock (2,662)

    Disclaimer: RoundTableThoughts.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 © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Boeing’s crewed Starliner flight won’t return...

    July 26, 2024

    As Apple enters AI race, iPhone...

    October 7, 2024

    Some customers with Walmart-linked Green Dot...

    August 12, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here