Tucson, Arizona (AP) —As if the soaring gas prices weren’t enough, drivers in Arizona and across the country are paying more for car insurance as repair costs and crowded roads push up premium rates. ..
Auto insurance companies are due to factors such as increased driving and increased repair costs after offering premium credits and refunds to customers as people stayed home in 2020 and the COVID-19 pandemic caused insurance claims to plummet. We are raising rates to cover the increase in billing costs.
Several major insurers, including Geico, Allstate, Progressive and Farmers, have implemented automatic premium rate increases since mid-2021. The rate declaration to the Arizona Insurance Financial Institution shows.
Geico Casualty Co., Arizona’s largest private vehicle liability insurance company with a market share of nearly 15%, announced in November an 8% rate hike and a partial rate cut for some coverage.
State Farm Mutual, the state’s second-largest automobile liability insurance company, has applied for a 0.4% rate hike for Arizona’s private car customers starting March 1.
Progressive Advanced Insurance and its sister Progressive Preferred, the third and fourth largest insurers in market share, respectively, have Arizona’s automated insurance rates rising in the range of 2.5% to 6.9% from mid-2021 in Arizona. The state Farmers have applied for an increase in total. 8% or more.
Allstate Fire & Casualty, the state’s sixth-largest personal vehicle liability insurance company, has applied for a 7% increase starting this month.
In Arizona, car insurers do not need to obtain state approval before changing rates, as long as the entire market is considered competitive.
Insurers say higher premiums are needed to offset the increase in claim losses since the pandemic’s heyday, including increased driving and repair costs due to supply chain problems and labor shortages. The factors are listed.
Insurers moved to offer policyholders discounts and other remedies in March 2020. It soon became apparent that insurance claims were plummeting as more people were off the road due to the shutdown of COVID-19.
“At the beginning of the pandemic, there is no doubt that mileage and claims fell off the cliff. During that unique period, insurers did a lot to provide policyholders with some relief. The American Property and Insurance Association’s automobile insurance and claim policy.
“It took a while, but I’m back where I’m driving the same or better than before the pandemic,” said Pasmore, who has reached near-pandemic levels, according to Ministry of Land, Infrastructure, Transport and Tourism data. It shows that. And the death toll increased in 2021.
At the same time, Pasmore noted that the severity of accidents, including fatal accidents, has increased and repair costs have increased.
As a mutual insurer, State Farm, owned by policyholders, has sought to respond to changes in car claims and costs while minimizing the impact on customers, said Sevag Sarkian, a spokesman for the company. rice field.
At the start of COVID-19 in early 2020, State Farm provided auto insurance customers with over $ 4 billion in dividends and rate cuts. In February 2021, the company reduced special premium discounts in Arizona with a 3% rate hike.
“Our approach is to make step-by-step adjustments based on driving behavior to minimize customer impact,” says Sarkissian. “Vehicle billing costs are increasing, partly due to increased labor costs, material costs, and supply chain-related issues. Although mileage has increased, billing and severity have increased, but State Farm has increased. Automatic charges are below the level prior to COVID-19. “
According to a report published by the American General Insurance Association in February, rising billing costs include increased driving and worsening driving behavior, increased medical costs, increased injury claim resolution, and the severity of injuries in car accidents. It is caused by an increase in the cost of car repairs and replacements. ..
As a result, Arizona drivers are now seeing an increase after taking a break during the pandemic.
Arizona does not have the authority to pre-approve car insurance rates, but the state insurance department declares to ensure that the rate filing is not unreasonably discriminatory and meets other legal requirements. Review the book. And financial institutions.
“As long as there is enough competition, the department cannot find an excessive rate,” Krug said. “The department scrutinizes all rate declarations received to ensure that they are justified and meet the requirements of the law.”
California was the only state to demand premium breaks from insurers due to a plunge in claims during the COVID-19 shutdown, but Arizona often encouraged insurers to offer premium remedies. Was one of the states of.
Some offer temporary premium discounts and credits, others change the base rate, and in most cases a special program to delay policy cancellations for non-payment of customers hit hard by COVID-19. Was set.
Throughout the industry, insurers have refunded or discounted approximately $ 14 billion in response to reduced claims, according to the Insurance Association.
But some consumer advocates say the industry should give policyholders a bigger break, and the sharp drop in car losses in 2020 has put much of that savings in their pockets. ..
According to a report by the Consumer Federation of America and the Center for Economic Justice last August, insurers should have returned an additional $ 30 billion to policyholders based on the reduction in losses. Includes $ 648 million in Arizona.
“Although driving has almost recovered since the pandemic, we strongly believe that Arizona consumers and consumers in all states have been overcharged by insurance companies,” said Michael, a consumer federation research and advocacy group. Delong said. “Insurers are doing very well, and instead of trying to refund premiums, many have responded by giving executives big bonuses and dividends to shareholders. It’s not fair at all. . “
APCI’s Pathmore disputed consumer advocates’ reports, saying premium reductions are no longer justified as claim costs rise sharply.
“They are still basically talking about the period that existed two years ago,” he said. “We are at a very different time now.”
Regulators and insurers need to make sure that prices are not unreasonably discriminatory and that there are enough fees to ensure the carrier’s solvency.
Faced with rising car insurance costs, consumers can save money by going to buy lower premiums, Klug and DeLong said.
