Auto insurance

Report: Auto Insurance Rates Expected to Rise at Least 4.9% in the U.S. This Year

Drivers in Minnesota are expected to see a 14% increase in their auto insurance bills in 2022, the highest in the United States, while drivers in Massachusetts are expected to see their premiums drop by a tenth of a percent, according to a Bankrate.com analysis.

Overall, Bankrate found that between January 1 and May 18, there were an average of 9.1 rate increases approved per day in the country. “This means that, for the remainder of 2022, there is a strong likelihood that rate increases will continue to be filed,” the report said.

Bankrate relied on data from S&P Global Market Intelligence, which compiled rate filings from the Electronic Rates and Forms Filing System (SERFF). Since some states, such as Florida, do not report rate filings to this system, their data is not available.

The average rate increase filing for 2022 is about 4.9%, S&P Global reported. “This means that with the average cost of auto insurance at $1,771 per year for full coverage, consumers could soon be paying up to $1,858 per year for the same coverage,” Bankrate said.

The highest projected percentage increases after Minnesota are Arizona and Louisiana, both at 7.1%, followed by Nevada at 6.7% and Texas at 6.2%.

The most impactful increase, where a high percentage is added to an already high rate, will be felt in New York where a 4% jump will result in average annual bills of $3,227. After New York comes Louisiana, 7.1% and $3,066; Nevada, 6.7% and $2,588; Michigan, 3.7% and $2,432, and Georgia, 5.8% and $2,126, Bankrate said.

Three New England states are among the five states expected to see the smallest increases. After Massachusetts comes Vermont, 0.2%; Colorado, 0.4%; Rhode Island, 1.0% and Alaska, 1.5%.

In California, carriers requested rate increases, but none were approved.

The discount rate provided no explanation for the differences in premiums from state to state. It should be noted that Massachusetts, where inflation failed to move rates, has the lowest labor rate in the country.

“Auto insurance companies often raise their rates to help rebuild their loss reserves,” wrote the report’s authors, Cate Deventer and June Sham. “While paying a higher premium isn’t ideal, it could mean a greater likelihood that a business will be able to remain financially sound enough to pay future claims.”

Bankrate has predicted that rates will continue to rise, in response to inflationary pressures and an increase in the frequency and severity of accidents.

“With inflation hitting 40-year highs, car insurance premiums will also rise, in part reflecting higher vehicle repair and replacement costs,” said Greg McBride, chief financial analyst at Bankrate.

Mark Friedlander, director of corporate communications at the Insurance Information Institute, told Bankrate that labor shortages and supply chain difficulties have led to higher costs, which carriers are now passing on on their customers.

“We expect to see significant rate action by many national and regional insurers in the second half of 2022 as auto insurers experience a sharp increase in the frequency and severity of auto accidents,” Friedlander said. “As a result, insurers’ loss costs have risen significantly because claims are higher in part due to higher prices for auto replacement parts, which rose by double digits year-over-year in due to supply chain disruption, as well as rising labor costs.

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