Producers in the competitive car insurance market know that premiums are calculated through a complex combination of many factors, including age, car model and claims history. However, a new study from insuranceQuotes.com
reveals that that a new factor may impact rates for clients more significantly—the time of the year a policy is purchased.
The study, performed for insuranceQuotes.com by Quadrant Information Services, looked at median premiums for a 35-year-old single male driving a sedan in each state during each month of the year. The result was surprising.
Month-by-month premiums showed a clear-cut difference in each state, but in some, the swings were so drastic, it could cost almost 50% as much to purchase an auto policy in the most expensive month versus the least.
“Anecdotally, we know that rates vary month to month or state to state, so we decided to run the numbers,” insuranceQuotes.com senior insurance analyst Laura Adams told Insurance Business. “We were really surprised to see some of the variability. I mean, we’re talking about almost as much as a 50% difference in a state like Hawaii.”
Wyoming, the District of Columbia, Maryland and Pennsylvania also showed extreme variability, with percentage differences in the mid- to upper-30s. Comparatively, South Dakota, Arkansas and Utah experienced low rates of change.
The US as a whole experienced just a 7.5% difference in median rates in the most expensive versus the least expensive time of year.
Unfortunately, the data doesn’t tell producers much as a whole. Adams said that despite insuranceQuotes.com’s best efforts, the team was unable to see identifiable patterns for the country as a whole.
“We had hoped to see some really clear patterns, but we just didn’t,” Adams said. “There were very, very low rates in December for many states, but December was also the most expensive month for some states. Really, the only takeaway we found was that there is high variability and more than most consumers and members of the insurance profession would think.”
As for the states that headed the group’s list? There isn’t really much to draw from here either, she said.
“Hawaii is a very regulated state, but we saw other regulated states that weren’t at the top,” Adams conceded.
In South Dakota, where rates fluctuated the least from month to month, Insurance Commissioner Merle Scheiber attributed the low variability to high competition in the state. However, Adams pointed out that states like Pennsylvania—which also has a relatively high number of competing carriers and low rates—are at the top of the list.
“I don’t know that there’s really one explanation that really applies across the board and that’s frustrating,” she conceded.
Adams did say, however, that insurance professionals should use the information to encourage clients to shop more often and in different parts of the year to insure they’re not overpaying for coverage.
insuranceQuotes.com hosts an online tool for consumers and producers to check out rate trends in their own state based on more specific data, including age, make and model of vehicle.