Triple-I Blog | Personal Insurance Losses Increase Due to Many Factors

Almost all major US insurers have indicated they will be insolvent in the second quarter of 2022, according to a study by S&P Global Market Intelligence. A number of factors have made this possible and are driving up premiums when insurance claims are lost. The loss ratio is the number of dollars of value that the insurer spends on claims.

The factors that drive the cost of auto insurance are:

  • Insured losses due to the number of accidents and the severity of the accident;
  • The increase in deaths and injuries on the road, which leads to an increase in the number of lawyers at the wheel;
  • Continued supply chain pressures, resulting in higher prices for vehicles, replacement parts, and services; and
  • Repairing more expensive cars for safer and more technologically advanced cars.

“The private car business, which was surrounded by the increase in the cost of repairing cars and changing other costs, increased by about 101.5% in 2021 from 92.5% in 2020 and 98.8% in 2019,” S&P reports. The combined ratio represents the difference between claims and premiums paid and premiums collected by the insurer. A combined score below 100 represents a net profit, and a score above 100 represents a loss. “With the private car business on the verge of a market crash in 2021, we project it to have a full recovery in 2022.”

At the beginning of the epidemic in 2020, car insurers – expecting fewer accidents in the middle of the economic crisis – returned about $ 14 billion to policyholders as refunds and accounts. While insurance losses have been slow and deep in 2020, they have risen steadily over pre-pandemic levels.

With many drivers returning to the road in 2022, this trend is expected to continue. The severity of traffic accidents after the epidemic on US highways is highlighted by the fact that traffic deaths – after a decline of several decades – have increased in the past few years due to many drivers speeding, driving distractedly, or not wearing seat belts during accidents. plague. In 2021, the death of US cars reached the age of 16 yearsand about 43,000 people died.

“When daily life came to a standstill in March 2020, dangerous behavior increased dramatically and traffic deaths increased,” said National Highway Traffic Safety Administration (NHTSA) Administrator Steven Cliff. “We were hoping this would end in 2020, but, unfortunately, it’s not.”

This year, NHTSA estimates, 9,560 people died in car accidents between January and March, a 7 percent increase from the same period in 2021, making it the deadliest since 2002.

Car insurance companies also have to deal with more expensive things than what is happening on the country’s roads. The latest car insurance research published by a Insurance Research Council (IRC) highlights the role of a lawyer in raising insurance premiums – and, ultimately, premiums – in states where auto recovery is not affordable. Since attorney involvement is more common in personal injury cases, NHTSA numbers are important to understanding the pressure on auto insurance rates.

IRC – like Triple-I, partner The Institutes – also shows that consumer spending on auto insurance has grown at a slower pace over the past 30 years than average home spending, up to the end of 2019 (see chart below).

In an environment as dependent as our country is on transportation, the availability and affordability of auto insurance are critical factors in all consumer concerns. Triple-I will continue to explain what is happening on this important line.

Learn more:

IRC Releases State Auto Insurance Affordability Rankings

Phone Restrictions Cut Damage; Telematics Can Help Reduce Distracted Driving

2022 P&C Underwriting Profits Seem to Grow as Fees Rise, Tough Market Continues

Legal Pot’s Link to Car Crashes Varies by State, Study Finds

Delaware Legislature Suspended Without Action on Banning Gender as an Auto Insurance Factor

IRC Study: People’s Perceived Impact of Lawsuits on Auto Insurance Claims

Traffic jams since the start of the pandemic