Auto Rate Increases: Are you wondering why your auto premiums are going up? What Your Insurance Sto

Countrywide auto insurance rates are on the rise. In fact they are increasing at a rate that the industry hasn’t experienced in more than a decade. There are 5 primary factors contributing to the increase. Below are the factors with reference to where the information and statistics were obtained.

Gas Prices

• Record low gas prices are leading to record consumption levels. This means people are driving more miles, which is leading to more accidents. In fact, last year there were approximately 250,000 more accidents than in 2014, and miles driven played a major role. (Source: Insurance Information Institute)

• A report from the Federal Highway Administration shows that miles traveled in 2015 increased by approximately 107.2 billion miles.

Rising Employment

• Robert Hartwig, president of the Insurance Information Institute (III), stated the improving economy is putting people on the road for longer hours and more miles. He said, “People drive to and from work and drive to entertainment.” He added, “When they are out of work, they curtail their movement.”

Distracted Drivers:

• According to a recent AT&T survey of subscribers, over 70% of drivers admit to using their smartphones while driving & 61% of respondents stated that they text behind the wheel. Even more disturbing 37% check e-mail, 28% surf the web, 27% use Facebook & 17% take selfies.

All this has led to more accidents and in some cases some very severe & costly occurrences.

• According to research released by AAA Foundation for Traffic Safety a February 2016 report found about 87% of drivers engaged in at least one risky behavior behind the wheel within the past month, including using handheld cell phones or not wearing seat belts. Source: CNBC News

Increased cost of insurance claims:

• Increased cost of vehicle repairs

“Today’s cars are more sophisticated, which makes them more expensive to repair. Cars have improved safety technology and are installed with high-tech computers. Body shops must use advanced diagnostic tools that require specialized training by technicians, which increase labor cost.” Source: “Dealing With the Rising Cost of Car Crashes” National Underwriters Property & Casualty, Property Casualty 360. Jan. 28, 2016.

Low Interest Rates:

Over the last decade for every dollar in auto premium the insurance industry has collected from policyholder it has paid out approximately $1.01 between paying claims & overhead expenses. All the industry’s profit has been driven by investment income. P&C insurance companies primarily invest in US bonds, Interest rates today are at historical lows which is challenging for industry profitability. Today companies are focused on improving their operating performance which requires companies to address rates.

These combined factors are the leading contributors to the increases in rates millions of people are currently experiencing across the country. It is the responsibility of the insurance agent to be prepared to discuss premium changes with their customers and educate them on options to assist in ensuring that customers is adequately covered in the event of a loss.

Offering our customers a Policy Review prior to their policy renewal to look for coverage gaps and discuss any potential premium increases will help them understand these changes. While reviewing your policy we look for potential discounts to help the customer lower their auto premium.

Potential Discounts (not all inclusive) to help lower auto premium include:

• Multi-Policy Discount

• Multi-Vehicle Savings

• Package Policy – discounts

• Deductibles: An additional way to decrease premium is to increase the deductible on a policy

Article Taken From MetLife.