Auto insurance has increasingly relied on technology more than any other segment of the industry. Insureds’ MVR (driving record) and CLUE (claims history) reports, credit-score-based pricing models, automated underwriting, multitiered pricing segmentation and usage-based insurance have been implemented to enhance predictive modeling in the hopes of achieving consistent financial returns for insurance companies.
However, recent results in the personal auto segment tell a starkly different story. Numerous outlets have reported that claims costs in 2016 rose approximately 13 percent while rates increased an average of 7 percent. The market share leader in personal lines auto insurance reported a $7 billion loss in 2016.
Regardless of the industry, those types of trends spell higher prices for consumers. Industry experts point to a number of factors responsible for the increased frequency and severity of claims: A moderately improving economy and lower fuel prices have resulted in more cars on the road and more miles being driven. Also, distracted driving has increased (think navigation systems, texting while driving, etc.).
Additionally, the cost to repair damaged vehicles has risen sharply over time. What once was a $500 bumper replacement is now a $3,000 claim with the inclusion of rear cameras and backing sensors.
Most industry insiders contend that auto insurance prices will continue to increase for the foreseeable future as companies focus on returning to profitability.
At AAA, our priority is improving the lives of members. That’s why AAA Ohio Auto Club Insurance Agency has remained an independent agency. As an independent agency, we represent multiple insurance companies to give us the best opportunity to provide members with fair and competitive coverage and pricing options. We carefully select each company we do business with to ensure we provide our members the same sense of security and protection you’ve come to know and trust through our emergency road service. We do business the way a member prefers— with multiple distribution points, extended hours of operation to support member service needs, annual policy check-ups to adapt to members’ changing needs, and partners that offer exclusive discounts available only to AAA members.
As auto insurance prices continue to increase, more members are finding value in the insurance services we provide. Over the last number of months, AAA Ohio Auto Club Insurance Agency has closed a robust 40 percent of our quote opportunities, a testament to the value of having multiple carriers from which to choose.
I personally invite you to experience what tens of thousands of your fellow AAA members already have: insurance — the AAA way.
David McMullen is vice president of insurance and financial services at AAA Ohio Auto Club.