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Rate increases for auto coverage ranged widely among the state’s largest insurers: GEICO raised auto rates 53.9%; Allstate raised rates 37.8%; Farmers raised rates 32%; Progressive raised rates about 22%; and State Farm raised rates 17.1%, said a spokesman for the Texas Department of Insurance. The growing expense from insurance adds to the financial squeeze felt in many households, which are already dealing with the highest inflation in 40 years. The price gains for Texas insurance easily outstrip the pace of inflation. For 2022, the national Consumer Price Index rose 6.5% for all items and 14.2% for motor vehicle insurance, according to the U.S. Bureau of Labor Statistics.
By that metric, the cost of auto coverage for Texans rose two-thirds more than the national increase last year. “This is just way, way too much of an increase,” said Michael DeLong, a research associate at the Consumer Federation of America, a Washington nonprofit. “For many years, we’ve been advocating for regulators to stand up for consumers and carefully look at insurance rate requests — and not be afraid to disapprove them.
“But from what I can tell, Texas seems to be doing nothing for consumers,” he said. The Texas Department of Insurance, known as TDI, said it reviewed 2,590 rate filings in 2022. Insurers withdrew 229 filings for various reasons and 108 were rejected for technicalities, such as filing under the wrong business line or not providing enough information.
“No filings were disapproved,” TDI said on its website.
“That strongly suggests the Texas Department of Insurance is basically rolling over for insurance companies,” DeLong said.
But a TDI spokesman said the agency saved consumers over $16 million because companies withdrew some requests in response to regulators’ questions.
Insurers said they have been hit hard by inflation with rising costs for supplies and materials, along with labor. The value of vehicles and homes also has grown sharply in the past few years, and that raises the cost of replacing them.
“You’re gonna pay more to insure the same car than you would have two or three years ago,” said Rich Johnson, a spokesman for the Insurance Council of Texas. “Cars are more expensive, and there are more accidents, more injuries and more medical bills.” In 2021, the cost of replacement parts rose 13% and rental car rates rose over 50%, the insurance group said.
There also were 4,573 fatalities on Texas roads in 2021, an 18% increase from the year before.
“We saw the severity of accidents increase during the pandemic,” Johnson said. “People were driving more and driving more distracted, and that trend has just continued.”
State Farm, one of the largest auto insurers in Texas, said it’s continually monitoring trends and making adjustments to balance price and risk.
“As more people are on the roads, we’re seeing an increase in claims,” spokesman Sevag Sarkissian wrote in an email. “Auto claim costs are being compounded by record inflation and supply chain disruptions. All of this has increased the cost of labor and materials, which translates to higher auto repair costs.”
Last year, Johnson said, industry officials had projected a 20% increase in Texas auto insurance rates and they’re expecting another 10% increase in 2023.
Johnson said the rate trends in Texas were “about the same that we’re seeing nationwide.”
DeLong said he did not have average rate increases by state or across the country. It’s often difficult to compare insurance costs because there are many tiers of coverage and providers offer service through multiple affiliates. In North Carolina, auto insurance companies requested an average increase of 28.4%, which would take effect in October. Regulators will review the request and if they believe it’s not justified, they can negotiate a settlement or call for a hearing — and they have settled for much lower increases in the past.
Last year, North Carolina insurers proposed a statewide average increase of 24.5% for homeowners coverage. After studying the data, regulators negotiated an increase of 7.9%, saving homeowners over $751 million in premium payments, the state insurance commissioner said.
In Texas, the cost of construction materials rose 25%, driving a double-digit increase in replacement costs for homeowners — and pushing up the cost of homeowners coverage, according to the Insurance Council of Texas. The February 2021 winter storm that shut down the Texas electric grid for days will ultimately cost Texas insurers $11.2 billion for losses, the insurance council said.
What are consumers to do? Shop aggressively: “Compare quotes from a half dozen companies, maybe more,” DeLong said.
People can raise their deductibles to lower monthly premiums, but if they have a claim, they’ll need to have extra cash to cover a higher share of repairs.
They also should review their driving patterns, Johnson said. If families are driving less than before the pandemic, they may be able to lower premiums.
“Make sure you’re getting all the discounts that you deserve,” Johnson said. “There also could be military discounts, and we always hear about bundling discounts and student discounts. And anybody can take a defensive driving course and that can help, too.” m. Schnurman, Business columnist & the Dallas Morning News (2023, March 07)