MINNEAPOLIS — The latest Consumer Price Index shows the cost of auto insurance is about 19.1% higher than it was a year ago.
A study released this summer by JD Power showed that 31% of all insurance companies have raised their rates over the last year.
So, the question a lot of people have is why?"
Aaron Cocking with the Minnesota Insurance Federation says insurance companies are dealing with a big increase in car thefts and carjackings.
The National Insurance Crime Bureau (NICB) stated "Vehicle theft is a multi-billion-dollar industry in the United States" with just over a million vehicles stolen last year.
That number could rise this year.
The Council on Criminal Justice (CCJ) said during the first half of 2023 it has seen a 33.5% increase in car thefts compared to last year.
"You have these increases in car thefts, carjackings, catalytic converter thefts, all of that is money paid out by insurers and premiums, and rates have to go up to correspond with that additional risk,” Cocking says.
Grace Arnold is the commissioner of the Minnesota Department of Commerce.
Her agency has to approve most of the rate increases that are proposed by insurance companies and she says many of these companies do cite crime as one of the reasons behind those increases, but it's actually just a small piece of the puzzle.
“They’re one of the factors that would be taken into account. The other thing is driving behavior, increased accidents, increased severe accidents, increased speeding,” Arnold said.
The Insurance Information Institute says the number of deadly crashes spiked during the pandemic.
That number has come down in recent months, but it's still higher than it was before the pandemic.
Cocking said these crashes have led to higher legal costs, medical costs, and higher repair bills for many insurance companies.
"The biggest driver that carriers are seeing by and large is inflation and the cost of repairing vehicles. The cost of labor to get these vehicles replaced has increased.”
Cocking said the parts themselves are more expensive and specialized, so it's taking body shops longer to track them down, which leads to longer wait times.
"Insurers are paying for longer periods of time for rental vehicles. I mean, it all kind of feeds into this bucket."
So, yes crime could be a reason why your insurance bill is higher these days, but there are so many other factors at play.
Experts say the U.S. has also seen more natural disasters like hurricanes, tornadoes, and hailstorms in recent years.
However, experts added they’re also seeing increased competition between insurance companies as they fight to attract more customers to make ends meet.
Experts say now more than ever it’s important to shop around to find the best rate.
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