In auto insurance, look for long-term trends

Re: “Time to fix Illinois’ insurance market,” Joe Cahill, (July 22):

Recently, the Illinois Department of Insurance issued a financial statement related to a “data call” for information on special Illinois auto insurance with the goal of disseminating that information on an insurance basis. Although we do not, we believe, have the legal right to disclose this information in a way that protects the privacy and confidentiality of insurers, the department has forced insurers to provide this information; and insurers, despite their doubts about the lack of confidentiality and privacy protection offered to them, have done their best to comply with these guidelines and have provided financial information in the years 2019-2021.

The publication of this has led to calls from critics of the insurance industry to refund car insurance refunds, including more than $14 billion in refund programs that were given by insurers to their customers in 2020 during the COVID-19 pandemic crisis. In addition, insurers have provided more than $220 million in COVID-19 relief funds to support communities.

The critics only focus on the short term when driving has decreased, but it is important that the insurance rates are stable and accurate to do what many insurers and regulators have always done and look at the long-term trends that affect driving and loss. Volatility in response to short-term trends can create uncertainty for consumers and insurers. This can mean uncertain consumer flexibility and an inability to rely on stability for budget purposes.

Analysis of highway driving data shows that after the outbreak, miles traveled dropped significantly but quickly returned to pre-pandemic levels. In addition, driving habits changed during the pandemic and continue to show that dangerous driving behaviors have emerged.

Although people drive less during the worst of the pandemic, those on the road are driving more dangerously. The US Department of Transportation National Highway Traffic Safety Administration’s 2020 annual traffic accident statistics show that 38,824 people were lost in traffic accidents nationwide. This represents the highest number of deaths since 2007.

In Illinois the death rate has increased 18.3% from 2019 to 2020; this increase was more than double the national average of 6.8%.

It is important to note that compared to other states, Illinois auto insurance consumers continue to benefit from a healthy and highly competitive market. Even though 88% of Illinois’ population is urban and the state has the third most populous city in the country, Illinois drivers, on average, pay the 33rd highest cost among the states and DC for auto insurance.

This is a great benefit for Illinois car insurance buyers considering, as the National Association of Insurance Commissioners explains: “Car premiums tend to be higher in urban areas. premiums.”

On average, Illinois car insurance premiums are in the middle (or middle third) of the nation. Its latest (2019) annual cost of $1,017, which reflects physical damage (collision and spread), is 15.5% lower than the national average of $1,204.

There are approximately 230 companies that offer car insurance in this state, with no single insurance company or group dominating the market. The Herfindahl-Hirschman index, which is widely accepted in the industry, shows the Illinois auto insurance market is unstable and highly competitive. With an index of 948, the auto insurance market in Illinois is healthy as many companies work to provide the highest level of auto insurance and service to consumers.

Insurers strongly encourage drivers to reduce their risk by avoiding dangerous situations that could lead to accidents. Insurers will continue to promote good infrastructure, including reliable automotive supply chains and safe roads, to help keep insurance premiums affordable for consumers.

The American Property Casualty Insurance Association, the Illinois Insurance Association and the National Association of Mutual Insurance Companies have remained committed to additional measures to help control consumer costs, such as changes in tort liability, auto body repair and medical reimbursement.

Vice President of Government Relations
American Property Casualty Insurance Association

Executive Director
Illinois Insurance Association

Regional vice president for government affairs
National Association of Mutual Insurance Companies