One of the questions we get all the time is some variation
of “My cars are getting older; I have not had any accidents, why are my
premiums increasing?” Well I am going to
do my best to explain to you now, what is happening with auto rates and what
the future may hold as far as your auto insurance and the industry as a whole. While I hate to be the bearer of bad news,
you can expect auto rates across the industry to go up noticeably unless one
brand or another chooses to buy market share. This is a practice fairly common in the
industry when a company takes a loss to gain market share. GEICO and
Progressive are known for that. Not a
big practice here at Farmers which is a very conservative company.
Which brings us to the aforementioned question, WHY? If you are like most people your gut answer
to this question is “because they can”. It’s
certainly an easy explanation and as a people don’t we always want the easy
explanation? Like in most situations the problem goes deeper and is a touch
more complicated than the answer above may suggest. Several factors are challenging our industry
at the moment.
Have you been enjoying the lower gas prices? Of course you
have, as have the rest of us. As a
result we are driving more than we have in years. While that’s great and reminds me of the old
cruising days (and a whole lot of fun memories) more driving leads to more
accidents. More accidents leads to more claims. More claims leads to higher prices.
Higher prices leads anger and anger leads to the dark side of the force. Insurance
is a pool of risk shared by all and even though you may get out of the pool
when needed; plenty of others pee in it. These recent ice storms have not
helped matters either.
Unfortunately it doesn’t stop there. I wish it did. The
severity of those more frequent accidents have increased dramatically. The increase in severity is driven by
increased costs to cover injured parties as new technologies have become more
expensive. Much like a K-Tel commercial from the 70’s “but wait there’s more”. Traffic fatalities have been steadily
increasing since 2012. Illinois experienced over a 50% increase in litigated claims
in 2015 when compared with 2014.
There are two final things that are also contributing to
this increase. The first is the increase in new car sales which sold in record
numbers in 2015. The last is the cost of repairs, along with claims and litigation
increases we have to factor in the cost of repairs. Enjoy those back up cameras and sensors? Have
a radar cruise control or accident avoidance built into the car? How about wifi
and blue tooth? While we all enjoy the
technology they make the cost of repairs go up significantly.
"So, what can I do?" I can hear the question
emanating via the blogsphere as you are reading this. I will preface my answer with what not to
do. DO NOT SHOOT the messenger. Please
guys your agent doesn't control any of the pricing nor does he / she have any
influence on rates short of reporting what the competitors rates are. Do not leave your agent for a few dollar
savings. You are putting his / her kids through school and feeding their family
and they are working hard for you. As
long as that is the case please have a
heart. Do shop every 3 - 5 years just to
keep your toes in.( As an agent I hate saying that...) If there are multiple hundreds of dollars in
savings your agent will understand. Just
take their call at renewal time.
While all states have different laws (we are based in Lombard Illinois), we will do
what we can to answer your insurance questions, or direct you to the
appropriate answers for your State of residence. Write us at bfidlow@farmersagent.com or Tweet
us using the hash tag #ProtectionPros. You can also follow us on Facebook. If all
else fails we even have an old fashion land line. Which is 630-297-1407 We look
forward to talking with you soon.
Building our agency one friend at a time,
Barry Fidlow
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