The pandemic forced car insurance providers to offer discounts worth billions to customers. The insurance companies have now decided to increase their insurance costs as they start to retain normalcy. The insurance holders will face several difficulties after the discounts subside. Yahoo Money reports that Progressive Corp’s subsidiaries received permission to increase insurance rates in 10 US states last November. Customers’ financial situation is still under-recovery, and the increased insurance rates might result in turmoil.
Various Insurance Companies Have Decided To Rise Rates
Yahoo Money reports that the S&P Global Market Intelligence witnessed 10 significant increases from 3% to 12%. The insurance providers, including Zebra, have decided to increase the insurance rates across the country. The reports state multiple reasons for a rate hike. Yahoo Money quoted David Snyder, vice president of the policy research and international division for the American Property Casualty Insurance Association; he said, “The intersection of an improving economy, increased dangerous driving behavior, rising injury and vehicle costs, increasing litigation, severe supply and demand imbalances, as well as COVID-19 related global shipping challenges, are combining to create significant upward pressure on auto insurance pricing.”
Car Accidents And Thefts Have Increased This Year
Yahoo Money reports that around 20,160 car accidents occurred in the first six months of 2021. The number is 18.4% higher than in 2020. The National Highway Traffic Safety Administration’s reports show a 13% increase in road traffic in 2021. The death rates are also on an upward graph. The reports show 1.3 deaths per 100 million vehicle miles traveled (VMT). The fatality rate was 1.28 the year earlier. The weather change is also a prime factor; the unpredicted storms and other extreme circumstances have resulted in higher losses. The reports show a $15 billion insurance loss in 2021, compared to $1 billion in 2020.
Inflation Is A Growing Concern
Individuals’ more extraordinary purchasing ability has surged the demands for new cars in 2021. The supply chain is imbalanced, leading to long delays in car purchases. Yahoo Money reports that the new car and used car costs rose by 11.8% and 37.3%, respectively, in 2021. The increase in missing vehicle cases has also resulted in more significant losses.