Auto Insurance Trends: Car Insurance Rates Are Skyrocketing & What That Means for Your Clients
car-insurance-rates

Why Car Insurance Rates Are Skyrocketing & What It Means for Your Clients

If everything seems to be more expensive lately, you’re not wrong. With the combination of record inflation, a looming recession, supply chain issues, and climate disasters, life is getting more and more pricey. And your clients are likely feeling it. If you haven’t already started getting calls from clients looking to save on car insurance, you’re about to.

So here’s what you should know about the challenges and trends in the car insurance industry for 2023 and exactly how you can help your clients.

Auto Insurance Faces Big Challenges: Car Insurance Rates Are on the Rise

The fact of the matter is that car insurance is more expensive now than it was 10 years ago. To put into perspective, rates are up 28% nationally since 2011. And from 2020 to 2021, they increased by 3% alone. 38 states saw an increase in car insurance rates over the last year, while 13 states saw a decrease in rates (lucky them!). 

So, what gives? Average annual rates are now a whopping $1,529, but what’s behind this overall hike over the last decade might surprise you. It boils down to a key factor: risk. Although car insurance is largely based on drivers (age, driving history, make and model of the car, etc.), other factors are also considered, like crime rates in the neighborhood, repair costs of the vehicle, and more. 

As an insurance agent, this is not new information to you. But your clients are going to question why car insurance rates are on the rise, and you should be able to explain. So here’s what your clients might not have considered when it comes to rising insurance rates.

Economy

Like it or not, the state of the economy plays a role in insurance rates. We’re still seeing the impact of supply chain issues from the pandemic, meaning that new and used vehicles are not only more expensive to buy, but more expensive to insure. It’s also making it harder and more expensive to get repair parts for vehicles, meaning claims cost insurance companies more (which gets passed to the consumer). To put a number on it, motor vehicle parts and equipment are up almost 15% in costs across the U.S. since 2021.

These factors have had insurance companies re-evaluating what they charge for car insurance, as their costs have increased. After all, insurance companies need to maintain healthy margins in order to keep insuring us.

These factors have had insurance companies re-evaluating what they charge for car insurance, as their costs have increased. After all, insurance companies need to maintain healthy margins in order to keep insuring us.

Driving Behaviour

Your driving history plays a huge part in your car insurance rates, but your clients might be surprised to learn that general driver behavior trends also play a part. This can be frustrating since it’s out of their control, but it’s a part of how insurance companies calculate risk.

The unfortunate news is that drivers are only getting more and more reckless. The rate of deaths from car crashes by 100,000 miles traveled increased by 21% from 2019 to 2020, the largest annual increase since the data started in 1975. Data also shows that more drivers are testing over the legal blood alcohol limit than before the COVID-19 pandemic. Combined with a COVID-19 spike in distracted driving accidents, it’s no surprise that insurance companies are alarmed and raising rates accordingly.

Crime

The U.S. population is increasing, especially in metro areas. This typically leads to more traffic congestion, uninsured drivers, and an increase in crime, all of which contribute to higher overall car insurance rates. In fact, 2020 saw an 11% increase in vehicle thefts versus the previous year, and motor vehicle theft totaled $7.4 billion in losses for 2020 alone.

Auto Insurance Trends: What This Means for Your Clients

While you might not be able to control rising car insurance rates and auto insurance trends, you can still help your clients find affordable car insurance so they can stay protected. You might start getting calls from your clients asking how to cut their car insurance costs (if you haven’t already), so we’ve got the tips you need to help them.

  1. Remind them that they have options: Find out when their current policy is up for renewal so they know when they can start looking for new, more affordable policies.
  2. Bundle their insurance policies: Many insurance companies offer a multi-policy discount, so help them find a great option for both car and home insurance to save money.
  3. Help them understand their risk: Whether it’s transitioning to a safer vehicle, taking a safe driver course, or removing a high-risk driver from their policy, there are ways to reduce their risk to insurance providers and net their savings.
  4. Find discounts: They could be entitled to a veteran’s discount, a student discount, or even just a discount for switching to e-billing. Helping your clients find out what they’re entitled to in terms of discounts will go a long way.
  5. Offer referral discounts: Everyone loves to save money, especially if it’s as easy as passing along the name of their trusted insurance agent. By offering a discount for referrals, you’ll get great new clients and help secure the business of existing clients. Agent MarketPlace gives you high-quality new leads, but client referrals are worth their weight in gold when you can get them.

It’s never easy being an insurance agent, especially when insurance costs are on the rise and auto insurance faces big challenges. But proactively helping your clients save money will help you be seen as someone in their court and cement you as their lifelong insurance partner.

The Bottom Line: Auto Insurance Industry Challenges Can Be an Opportunity

Car insurance rates might be on the rise, but the challenges facing the auto insurance industry can be an opportunity for savvy agents. Insurance clients are going to be looking to save money and the agents that help them cut down on their car insurance costs are going to find themselves with lifelong clients, referrals, and an expanding book of business.

Plus, now is a great time to get even more clients. People are shopping around for car insurance, which means more high-intent leads for agents. ConsumerCoverage Agent MarketPlace gets you exclusive, high-quality leads that need insurance now. The insurance business isn’t always easy, but good leads make a difference.