US auto insurers are racing to increase premium rates as they seek to offset historically poor underwriting results. The year-to-date nationwide average increase for private auto insurance is 15% in 2024. There is a wide variance in the effective rate change between individual states, according to Beinsure Media research auto insurance rates by U.S. states.
The average annual cost of auto insurance in the U.S. is $2,014. Minimum coverage costs $622 per year. Monthly, full coverage averages $168, while minimum coverage averages $52.
U.S. auto insurers report underwriting losses despite improved premium rates. In 2023, claims severity and higher catastrophe losses remain challenges. High loss severity will continue to hinder future profit improvement.
Rising premiums partly result from carriers’ efforts to catch up with increasing private auto loss costs through rate hikes. Auto insurance premiums vary due to personalized rating factors, even among individuals with seemingly similar circumstances.
Oleg Parashchak, CEO of Finance Media Holding, stated, “The average cost of auto insurance in the U.S. is $2,014 per year. Minimum coverage averages $622 annually.” Monthly, full coverage costs $168, and minimum coverage is $52.
Men generally pay more for car insurance than women, except for 50-year-olds. Fifty-year-old women pay, on average, $2 more annually for full coverage than men of the same age.
Insurers must adopt current AI technologies and prepare for future advancements to address emerging trends in the industry effectively. To integrate AI in the claims process, insurers should examine current drivers of claims quality.
The biggest insurance companies in the U.S. often have more coverage options. If you want to customize your policy with endorsements or need specialty coverage like rideshare insurance, a large provider is more likely to have those policies.
STG benchmarked over 100 claims operations, finding the best opportunities for improvement in contact, investigation, and settlement phases. Managing these areas involves extensive human resources and repetitive tasks prone to errors.
The rate information is sourced from disposed private passenger auto rate filings collected by S&P Global Market Intelligence that are submitted to the Department of Insurance in various states.
The analysis is limited to rate filings of each state’s 10 largest private auto underwriter based on 2022 direct premiums written plus any of the country’s 10 largest private auto underwriters outside the state’s top 10.
Developing a comprehensive AI strategy for claims, reimagining plans for people, processes, technology, and risk, is crucial. This can help achieve an estimated $100 bn in gross written premiums and related expense savings.
If current trends continue, the average auto insurance cost will rise by double digits for two consecutive years by the end of 2024. Prior to this spike, the average yearly increase was in the low single digits, except in 2020 when COVID-19 led to premium credits for reduced driving.
Investing in claims AI solutions can mitigate the impact of upcoming retirements. It allows new claims personnel time to develop expertise, as noted by Beinsure Media.
AI capabilities are expanding from data tasks to prescribing recommended actions. This helps insurers anticipate emerging risks and improve process efficiency and customer satisfaction.