And people aren’t happy.
A new report from J.D. Power Insurance Intelligence has confirmed what we already suspected: automotive insurance rates are increasing at unprecedented rates. People are noticing, triggering a wave of shoppers looking for a better deal.
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Pretty much everyone has seen an auto insurance premium increase in the past year or so, even those with clean records. With inflation squeezing consumers, people are even more price sensitive than ever. That means fed up people are out shopping for a cheaper insurance option, ideally without cutting services offered.
While some thought the telematics devices which measure how much a person drives and charges accordingly, would be a cure for the problem of rising costs. However, with the pandemic over, people are out and driving more, especially to the office. J.D. Power concluded only 60% of those offered to participate in a telematics program opted in, and of those 40% saw a rate increase, meaning it wasn’t a positive experience.
With rising costs pressuring insurance companies, a situation J.D. Power calls “severe,” the firm notes a peculiar consequence. If you’ve noticed decrease in insurance commercials, you’re not imagining things. After over 20 years of a growing advertising war among car insurance providers, the industry is now downscaling how many commercials and other advertisements are run.
J.D. Power concludes the car insurance providers with the highest loyalty in the market right now are USAA, MAPFRE, NJM, Amica, and Erie. Conversely, those with the lowest loyalty are National General, The Hanover, Progressive, COUNTRY, and Liberty Mutual. One thing you’ll notice is at least two of those in the bottom group have done considerable advertising over the past several years.
When we really think about this problem, there are a few potential culprits. Number one is the surge in car thefts over the past few years. So many have tried telling the lie that those were victimless crimes since insurance “covers everything.” Eventually, all those losses force insurers to increase rates for everyone.
Another factor is the proclivity of the industry to total out cars with minimal damage, sometimes seemingly without only cosmetic damage. There’s plenty of debate swirling around how easily insurance companies total out crashed vehicles versus paying for repairs. But it makes us wonder if this practice hasn’t been a little too reckless and now it’s costing everyone.
Read the J.D. Power Insurance Intelligence report for yourself here.
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