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MARKETPLACE
PERSONAL AUTO INSURANCE TRENDS
FOUR THINGS THAT ARE “ IN ” FOR THE MARKETPLACE excerpts from “ 8 Personal Lines Auto Insurance Predictions ” written by AnneMarie M . Spears
The Big I recently reviewed some personal lines auto insurance predictions on the trends they believe will be shaping the marketplace over the rest of the decade .
RISING RATES
Auto insurance rates are anticipated to rise 8.4 % across the U . S . in 2023 , the largest rate increase in six years , according to ValuePenguin . Inflation is a key driver of increasing rates , as well as years of supply-chain pressure and the nation ’ s exit from the coronavirus era when carriers dropped rates .
“ Insurers have very little motivation to overprice the product , so what you ’ re seeing right now is completely an outcome of the cost ,” says Beth Riczko , president of property-casualty personal lines at Nationwide . “ Right now , the industry ’ s losing money in auto because the pricing hasn ’ t caught up with the cost yet . Many companies are expecting that to shift , and we ’ ll get to a better balance as we go through 2023 .”
ELECTRIC VEHICLES
In 2022 , fully electric vehicle sales reached over 800,000 in the U . S . to hold almost 6 % overall market share , nearly doubling from 2021 , according to Motor Intelligence . Also , the Bipartisan Infrastructure Law passed in 2021 provided $ 7.5 billion to develop the nation ’ s EV-charging infrastructure in efforts to encourage consumers to join in on the Biden administration ’ s goal of EVs comprising 50 % of all vehicles sold in the U . S . by 2030 .
In terms of personal auto insurance , EVs ’ biggest impact will be in loss costs . “ Since EVs represent such a small portion of the vehicle market for now , there are relatively few auto repair shops that specialize in EVs and few aftermarket parts suppliers are making inexpensive components to repair them after an accident . That drives up costs after a loss ,” says Michael Giusti , analyst at InsuranceQuotes . com .
SAFETY IMPROVEMENTS
By 2030 , 9 %, or $ 36 billion , will evaporate from the personal auto insurance premium pool due to improved car safety technology and a reduction of personal miles traveled , McKinsey projects .
Features such as rear cross-traffic collision warning , blind spot warning , adaptive cruise control , lane centering assistance and automatic emergency braking are the most popular technology-enabled safety features , according to a Consumer Reports survey , and some technologies , like backup cameras , are mandatory on all vehicles manufactured since mid-2018 .
EMBEDDED INSURANCE
Is embedded auto insurance – insurance that ’ s integrated into the car-buying process – the next threat to independent agents ? It ’ s certainly emerging , with 72 % of consumers preferring to have the opportunity to get auto insurance while purchasing a car at the dealership , according to a 2023 Polly survey .
Ultimately , the issue with embedded insurance is that personal auto insurance “ shouldn ’ t be treated as a transaction ; it ’ s a financial contract — it ’ s in place to help you protect your financial assets ,” Andrew says .
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40 KANSAS INSURANCE AGENT & BROKER