Which Direction Would Automobile Insurance Prices Go?

This is not a prediction you could make a lot of money out of it. But it is a topic of discussion between motorists and brokers. For some companies this is their business and they try to understand why car insurance prices go up or down. When the prices improve companies make more profits and attract investments. That is why it is probably a hotter subject as far as companies are concerned.

Vehicle insurance rates have been steady and actually going down in some states and areas. Many predict that this cannot be sustained and price increases are expected. Thanks to high competition and though economic conditions they were contained even though many motorists may claim that premiums are too high. 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 is based on how the insurers are doing. They expect the premiums 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 companies and say that large insurers 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 it may be followed by others. Also, some of the top companies 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 companies have a strong customer support in the market that they are not going to lose customers just because of a slight price increase. Furthermore, some companies 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 their 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 auto insurers. When the costs are up most companies’ first reaction would be to put up the prices of their products. 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 have been falling. Apparently, the cost increases wipes away the reduction in the injuries. It is difficult to argue when someone says that health care costs are expensive in the USA.

Bad Driving History and Premium Charges

Some companies have been improving their underwriting skills with clever programming and including more measures into their calculations. This allow them to work out an individual applicants premiums 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 your driving history anymore. They look at other indicators that may have nothing to do with driving cars. Credit history is one of them and your premium could go twenty five percent either way depending on how good your credit score.

Companies have always loved good drivers, safe neighborhoods, low mileage motorists and certain professional groups. The notion of looking after good, low risk motorists with cheap auto insurance premiums is well accepted. The opposite also true that they either want a lot of money from an 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 your premium low if you are a low risk motorist. 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 increases wouldn’t be the same across the country. Every state regulates their insurance market separately and some state commissioners could resist to increases. 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 their own opinions about the matter.

Share on Pinterest
There are no images.