Industry trends that impact insurance rates
A number of recent trends have caused insurance rate increases throughout the industry. Inflation has possibly had the biggest impact — as the cost of goods and services went up, so too did the cost of protecting our customers on the road. Here's an in-depth look at some relevant trends and how they can impact car insurance rates.
Why auto insurance rates are increasing
Repairing and replacing vehicles costs more
The auto industry has seen its share of labor shortages and supply chain disruptions over the past few years. As the TechForce Foundation reported in 2021, the demand for transportation technicians outpaced supply by an estimated 5 to 1, leading to higher labor costs. The Foundation's 2022 Technician Supply & Demand Report showed that gap continuing to widen from the previous year, with the supply of graduating automotive technicians dropping 11.8%.
Strained supply chains also caused prices for auto parts and vehicles to spike dramatically. Altogether, these factors led to a significant increase in the cost of vehicle repairs and maintenance: up 12.7% from July 2022 to July 2023 as reported by the Bureau of Labor Statistics. This came on top of 2021's 4.1% increase for the same months, and 2022's 8.1% increase.
In better news, while used vehicle prices spiked in recent years (as high as a 41.2% increase from February 2021 to February 2022), they've since started to decrease (down 5.6% from July 2022 to July 2023).
However, as car repair costs still rose overall in recent years, the amount insurers pay to fix vehicles also went up. Likewise, as vehicle values rose, insurers paid more to help replace their customers' totaled cars and trucks, all of which increased the cost of auto insurance.
Accidents increased, leading to more claim costs
The number and severity of car accidents increased in recent years, leading to more, and more expensive, insurance claims. This, coupled with higher vehicle repair and replacement costs, ultimately drove insurance rates up throughout the industry. That said, the National Highway Traffic Safety Administration's estimates of early 2023 data showed that car accident fatalities are finally starting to decrease after two years of dramatic increases.
Learn why your insurance rate could go up based on your specific circumstances.
Storm damage is more severe
As noted by the National Centers for Environmental Information, the frequency of costly weather events has grown in recent decades. In the 1980s, the U.S. averaged 3.3 weather events per year that exceeded $1 billion in damages and costs. In the 2010s, that jumped to 13 events per year. And in the last three years, we averaged 20 per year. These storm damage increases have led to more, and more expensive, storm-related insurance claims. This can mean higher insurance rates as the expected costs for future storm-related claims also rises.
There are many factors that can affect your car insurance rate. If you have questions about a recent rate increase, please contact us. We'll answer your questions and help you find ways to save on your Progressive auto insurance policy.
Ways to Save
How you can lower your insurance rate
Maximize your discounts
Take Snapshot® for a spin
Review your policy
Explore your payment options
Paying in full or setting up automatic payments can easily save you more with a discount.*