Here’s what’s happening to your auto insurance costs
By James Lynch, Chief Actuary, Senior Vice President of Research and Education, Triple-I
You’ve probably been reading news stories about rising inflation, and auto insurance has been pulled into the picture. But that is a little misleading.
Auto insurance rates aren’t soaring. They are returning to normal, pre-pandemic levels.
Consumer prices in April were 4.2 percent higher than a year ago, the Bureau of Labor Statistics reported Wednesday, and its report picked out auto insurance as one of the areas that had “a large impact on the overall increase.”
Auto insurance rates were 2.5 percent higher in April than in March and 6.1 percent higher than a year ago.
That doesn’t mean, though, that the cost of auto insurance is skyrocketing. Remember that a year ago – April 2020 – insurers were busy returning billions of dollars to consumers because of the drastic change in driving patterns the pandemic brought on.
Those givebacks – which eventually totaled $14 billion – drove down the price of insurance, and the official inflation numbers reflected that.
Now driving patterns are returning to pre-pandemic norms – more or less. People are driving somewhat less than before, but they are driving faster and are much more likely to tinker with their smartphones or practice other distracting behaviors.
Premiums are reflecting the new normal, and in terms of the cost of insurance, that looks a lot like the old normal. The price of insurance, using BLS indices, is virtually unchanged from pre-pandemic levels – 0.01 percent higher than it was in March 2020, when the pandemic/recession began.
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