Auto insurers hike premiums to cope with increasing costs

Auto insurers hike premiums to cope with increasing costs

Auto insurers hike premiums to cope with increasing costs Years of higher than expected claims are taking their toll on US auto insurers and they are trying to make up for lost time.

Major insurer Travelers announced in January that it is hiking rates, following in the footsteps of Allstate and Geico . Now, a Bloomberg report has estimated that for every dollar in premiums paid to car insurers, they shell out $1.05 in payouts, which means that they have been operating at a loss for quite some time.

Furthermore, the report said that there is increased risk on the roads as distracted driving becomes more prevalent with the ubiquitous use of smartphones.

Want the latest insurance industry news first? Sign up for our completely free newsletter service now.

In addition, cars are also deemed more expensive to repair. The bells and whistles manufacturers put into units to aid autonomous driving are costing a pretty penny.

Derek Ross, president of Kulchin Ross Insurance services, said in the report: “Where a normal repair 10 or 15 years ago from an accident cost $1,500, now that same bumper  with all the technology is $3,500. The insurance companies are absorbing those real dollar claims while trying to figure out how much of this automation and technology is working to their benefit. ”


Related stories:
North Carolina Rate Bureau seeks 13.8% state-wide auto insurance hike
Mercury lists cheapest cars to insure in the US