Car 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 all enhanced predictive modeling in the hopes of achieving consistent financial returns for insurance companies.
Higher prices for consumers
However, recent results in the personal auto segment tell a starkly different story. Numerous outlets report 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 car insurance 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 mean more cars on the road and more miles 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. 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 as companies focus on returning to profitability.
Insurance from AAA
At AAA, our top 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 for the most 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 from AAA. We do business the way members prefer— with multiple distribution points, extended hours, annual policy check-ups to adapt to members’ changing needs, and partners with exclusive AAA member discounts.
As car insurance prices continue to increase, more members are finding value in the insurance services we provide. Over the last few months, AAA Ohio Auto Club Insurance Agency has closed a robust 40 percent of our quote opportunities. This is a testament to the value of having multiple carriers from which to choose.
Finally, 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.