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Last Thursday, we met with executives from 7 different insurance companies, one after the other. Every December, we invite our key company partners to review the year and plan for the next.<\/p>\n
It\u2019s a full day spent discussing trends, challenges and opportunities in the insurance industry. We learn a lot from the executives\u2019 lofty perspective. They learn just as much from our \u201cfront line\u201d reports. By the end of the day, trends usually emerge.<\/p>\n
This year, increasing frequency and cost of auto claims concerns almost every executive. Their companies are paying claims faster than they\u2019re collecting premiums. They can\u2019t afford to do that for long. We haven\u2019t seen this trend yet in our agency’s fairly small sample of Maine\u2019s drivers. But it\u2019s clear: we should prepare for rising auto insurance rates in the next few years.<\/p>\n
The Great Recession put extreme pressure on many household budgets. Many insurers focused their advertising message on reducing prices. GEICO spent more than $1 billion a year on advertising. State Farm spent about $800 million. This extreme competition caused prices to remain level for years. Total industry premiums remained flat from 2006 to 2009.<\/p>\n
2. People Are Driving Again<\/strong><\/p>\n While the economy was slow, driving decreased. Americans drove fewer miles 3 out of 4 years from 2008 to 2011, due to:<\/p>\n As the economy improved and gas prices dropped, Americans drove more. We now drive about 3.15 trillion miles per year, an increase of about 150 million miles since 2013.<\/p>\n 3. Distracted Driving is a Big Bummer<\/strong><\/p>\n Several execs shared their front-line adjusters\u2019 stories about distracted driver crashes. Maine adjusters report that many claims involve drivers using mobile devices to text, talk or use social media. Keep in mind that all three are illegal in Maine.<\/p>\n National data reinforces these stories. The National Highway Traffic Safety Administration (NHTSA) reported 431,000 people injured in distracted driving accidents in 2014, the latest year available. More than 3,000 people were killed. And that was 2 years before Pokemon Go.<\/p>\n 4. Crashes Are On the Rise<\/strong><\/p>\n With the increases in mileage driven and distracted driving, you might expect crash rates to spike. They have. Personal auto insurance claims in the U.S. increased 37.1% between 2006 and 2015. Meanwhile, auto insurance premiums increased 20.9%.<\/p>\n Higher speed limits, increased road congestion and distracted driving seem to be causing increased crash activity. A December 1 Portland Press Herald article<\/a> cited a 32% increase in accidents on Route 295 north of Portland between 2013 and 2015.<\/p>\n Related: When Should I Drop Collision Coverage?<\/strong><\/a><\/p>\n Related: Is Progressive Snapshot Right for You? 5 Questions to Ask<\/strong><\/a><\/p>\n FMI:<\/p>\n More Accidents, Larger Claims Drive Costs Higher, Insurance Information Institute, October 2016<\/a> (.pdf)<\/p>\n\n
What You Can Do to Control Auto Insurance Expenses<\/h3>\n
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