With major changes in the economy and the auto industry in recent years, changes in auto insurance are expected to drive the industry through 2022. LexisNexis market report He has identified the factors that made the purchase of insurance and the growth of policies irreversible: the decline in car sales due to the shortage of cars and issues of supply, problems of financing, and changes in the driving style. On top of this the cost of cars to American consumers is increasing again. Although there are several negative factors affecting the market, there is also hope that customers have the opportunity to make informed decisions and increase market share. In this article, we will discuss the issues related to car insurance.
The average cost of car insurance
The cost of insurance has increased steadily over the past few years. As explained in Sound Dollar’s guide to car insurance rates, average comprehensive auto insurance is $1,202 per year. This is for someone who is younger than 65, has more than six years of accident-free driving experience, and lives in a rural area. In Maryland, however, the average price is a little higher at $1,236, ie published by the Insurance Information Institute. Of course, the total cost of car insurance is affected by the price differences in the most expensive states, which shows that Maryland is the 12th most expensive state for car insurance.
What about car insurance
As mentioned in the beginning, there are several reasons to change car insurance. Below are three important factors that affect the cost of car insurance premiums:
One of the biggest economic factors affecting car insurance is the rise in national prices. In July 2022, CBSNews report on inflation showed a slight decline to 8.5% due to lower fuel prices. Despite these changes, inflation remains high, making it difficult to balance other rising costs such as food and shelter. With this in mind, many people decide to cut their car insurance to save money on other payments such as health insurance, electricity, home bills, and their mortgages. Meanwhile, the Federal Reserve is expected to raise its interest rate to 3.5% to 3.75%, in an attempt to reduce the economy without plunging the country into crisis.
Lack of resources
Global issues and geopolitics have made it difficult to establish proper supply chains in recent years. The advent of COVID-19 has caused many companies and industries to close, reducing the demand for cars. In recent months, however, many businesses have been reopening and demand has risen again to pre-pandemic levels. However, the combination of rising prices and the Great Recession has made it difficult to return to efficient supply chains, leaving existing products and services more expensive than before. The inadequacy of the traffic management system has a significant impact on car insurance – with fewer subscribers, the current policies have to raise prices to compensate for the losses.
In several states, there have been proposals and efforts to fight or keep insurance companies from using credit cards, which determine the eligibility of car insurance and premium rates. Like disclosed by the Consumer Federation of America, the Maryland House Economic Matters Committee has decided to keep the mandate and maintain the use of credit scores, which has angered many. Credit cards have been described as an unfair and inconsistent system, which punishes even the most careful drivers. Unfortunately, people who face systemic bias often have low credit scores, which makes them vulnerable to higher auto charges. It is a political change that also affects the economy of car insurance.