Which Direction Would Automobile Insurance Prices Go?

Vehicle insurance rates have been steadily going down in some states. Many predict price increases are expected shortly. How would it affect you? We will have a look at how people may be affected from future rate rises and who would be best placed to keep low premiums or even see reductions.

This is not a prediction you could make a lot of money on. However, there are researchers who try to understand why car insurance prices go up or down. When it improves companies make more profits and attract investments. That is why it is probably a hotter subject as far as they are concerned.

Rates have been steady and actually going down in some states and areas. Many predict that this cannot be sustained and increases are expected. Thanks to high competition and though economic conditions they were contained even though many people may claim to be paying too much. No matter how low they go there is no pleasing of some people.

What Are the Reasons Behind Premium Increase Predictions?

One of those predictions has been made based on how the insurers are doing. They expect it to go up a little because they believe it is too low to stay where it is. They look at profitability of some of the carriers and say that large ones are losing money. This has been the case for the last few years and it may be time they take a stand.

When a large company makes a move others may follow it. Also, some of the reputable ones may be comfortable with hiking premiums as they have a large dominance in the market. There is a chance that most policyholders will not be upset with a three or four percent auto insurance price increase.

Quite a few of them have a strong support in the market that they are not going to lose customers just because of a slight increase. Furthermore, some of them may be happy with their market share and slow down on aggressive sales efforts, which mainly relied on price points.

Cornering the market would be desirable to a point. If they haven’t been making money for some time they may want to turn attentions from gaining a larger market share to making profits. This is not a difficult logic to understand and sympathize even though we wouldn’t want to pay more money if we could help it.

Another angle to look at is the cost of claims. According to Insurance Research Council especially injury claims cost a lot more now for automobile insurers. When the costs are up usual first reaction would be to put up the prices. And injury claim costs have gone up nearly twenty percent recently according to researches.

This is a contradicting result since according to other studies number of accidents has been falling. Apparently, inflation in that sector wipes away the reduction in the injuries. It is difficult to argue when someone says that health care is expensive in the USA.

Bad Driving History and Premium Charges

Some underwriters have been improving skills with clever programming and including more measures into calculations. This allows them to work out an individual applicant’s quote more accurately. In other words, they can figure out if you are a high risk driver and charge you accordingly. Nobody can argue with this logic of charging more to people who are likely to claim more of the money in the pot. High risk quotes can vary violently but these high risk auto insurance companies may be able to offer you affordable rates.

In addition, they don’t only look at driving history anymore. They look at other indicators that may have nothing to do with it. Credit history is one of them and premiums could go twenty five percent either way depending on how good the credit score is.

Companies have always loved good drivers, safe neighborhoods, low mileage and certain professional groups. The notion of looking after good, low risk motorists with cheap automobile insurance is well accepted. The opposite also true that they either want a lot of money from a high risk driver or they would rather lose them to competitors.

Premiums for Good Drivers

Following on from above, it may be safe to assume that you can manage to keep it low if you have a clean record. The competition to win over them will continue. Who wouldn’t want regular money coming in from people who hardly cause any trouble?

Another point to mention is that rate hikes wouldn’t be the same across the country. Every state regulates the market separately and some commissioners could resist better. And the conditions may not be ripe in some areas.

We have been seeing a few reports and newspaper articles that the rates have been the lowest for a long while. Maybe we had a good run and it is inevitable that it will come to the end. But then everybody would have an opinion about the matter.