Why AUTO RATES CONTINUE TO RISE – FOR EVERYONE
* More miles being driven, increasing the frequency of claims – lower gas prices, improved economy
o According to the Federal Highway Administration, travel on all roads and streets changed by +3.9% — or more than 10 billion vehicle miles – for June 2015 compared to June 2014.
…
o The nation’s driving has increased for 16 months in a row, and June miles driven numbers just beat the previous high of 1.5 trillion set in June 2007.
* Georgia, North Carolina and South Carolina are on the list of states with the highest percentage increase in traffic deaths from 2014 to 2015, according to data from the National Safety Council.
* Costs are going up that drive claims severity, too – medical costs, cars, attorney representation
* J.D. Power forecasts new car sales in the U.S. will hit an all-time high in 2015, breaking a record set in 2004.
o And newer cars cost more to repair. For example, if you back into a fencepost in a 2000 Cadillac Escalade and break the taillight lens, you can replace it for $56. On the 2015 model, you can’t replace just the taillight lens. Now, you’ll need a whole new taillight unit that’ll set you back $795.
o More cars are being built with aluminum as well, which also costs more to repair. Tests by the Insurance Institute for Highway Safety found that repairing body damage on the aluminum- bodied 2015 Ford F-150 took longer and cost 26 percent more than on the 2014 F-150 made of steel.
* According to Forbes, health care inflation outpaced overall inflation in 2007, 2009, 2010 and 2014. And this trend isn’t slowing down. Costs are up seven percent in 2015.
* The typical U.S. hospital charges 340% of the Medicare-allowable costs to patients. And that’s what we’re getting billed. Of the 50 hospitals with the highest markups, the average is 1,010%.
* In 2014, the Insurance Research Council released a study in 2014 that found that the percentage of personal injury claimants in auto cases represented by attorneys rose to 36% in 2012, more than double the rate in 1977, and up from 31% in 2007. For bodily injury claimants, the rate rose slightly to 50%.
* At GEICO, the country’s second largest auto insurer, pretax underwriting gains shrank to $53 million from $393 million a year ago, mainly because it paid out higher claims more frequently – a trend the company also referred to during the first quarter. (Source)