Auto insurance prices fell in 2020 as pandemic curtailed driving

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Auto insurance rates for U.S. vehicle owners fell nearly 4% on average nationwide in 2020, with carriers adjusting prices based on reduced traffic volume and other changes in traffic. driving habits linked to the pandemic, according to Zebra, an insurance price comparison website.

The drop is the first nationwide since 2013, Zebra said. In addition to these rate reductions, which come into effect for new customers and as existing policies are renewed, many policyholders have received premium refunds of around 15-20% per month from clients. insurers in the spring. At the time, stay-at-home guidelines led to a nationwide drop in mileage and, in turn, a sharp drop in wrecks.

The rate cuts bring the average annual auto insurance bill to $ 1,483, down 3.9%, Zebra said. Auto insurance is the largest line of business for property and casualty insurance companies in the United States, with $ 248 billion in annual premiums in 2019 paid by consumers, according to the Insurance Information Institute trade group.

It is not known whether American consumers will applaud the cuts in the industry.

Releasing its annual rate trend report on Wednesday, Zebra noted that many consumers wondered why their premium bills hadn’t dropped more dramatically. Many continue to work from home with their vehicles parked all day.

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Nicole Beck, spokesperson for Zebra’s website, said the 3.9% average rate reduction reflects the way insurance costs are calculated. In addition to the annual kilometers driven, factors such as the insured’s postal code, accident history and age weigh heavily, she said.

Yet the 3.9% average rate cut comes as auto insurers post large quarterly gains in underwriting profits from fewer wrecks. In late December, advocacy groups for the Consumer Federation of America and the Center for Economic Justice called on state insurance departments “to require all auto insurers to issue a second round of premium refunds for consumers ”.

There have been “startling increases in profits for auto insurers as the country stalled again,” Robert Hunter, former Texas regulator and federation director of insurance, said in an interview.

Insurers have said they are cautious about additional large reimbursements due to uncertainties about future driving trends. Many say that accidents that still happen often result in serious damage and higher claim costs, which they generally attribute to faster driving speeds.

Some insurers have imposed above-average rate cuts of 4%. State Farm, the country’s largest auto insurer by premium volume, said it has implemented rate cuts of around 11% nationwide. Rates vary by state.

Kilometers traveled could now return to pre-pandemic levels after last year’s 51% drop, according to a report released this week by Arity, Allstate Body

telematics and driver data information branch. Based on data sets including both mobile apps and in-vehicle devices that record mileage, Arity said “the current kilometers driven are now close to normal.” He cited potential factors such as social “distancing fatigue” in the fall and road trips in late December, rather than airline flights, to visit family.

Average annual premium rates last fell in 2013, by 6.3% on average, Zebra said. From 2014 to 2019, fare increases were fueled in large part by the lowest gas prices in years amid an economic recovery in the United States, which prompted more people to drive.

Some insurers have also cited distracted driving, particularly the use of smartphones for talking and texting, as a contributing factor to accidents in these years, as well as an increase in adverse weather conditions.

Write to Leslie Scism at leslie.scism@wsj.com

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Appeared in the print edition of February 4, 2021 under the headline “Auto insurance prices have fallen with traffic drop”.


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