Less Driving Doesn’t Equal Lower Insurance Rates

The price of fuel is higher than it’s been in years, and motorists are feeling the pinch in their wallets and fleeing the roads in droves. Consequently–just as drivers, insurance companies, and state regulators alike have predicted–there are fewer drivers than ever on today’s roads. However, contrary to expectations, auto insurance rates have not likewise decreased. On the contrary, auto insurance providers, by and large,appear to be increasing their premiums

Michael Moriarty, deputy insurance superintendent for property and capital markets in the state of New York, is incredulous over the statistics for his home state. “On average,” said Moriarty, auto insurance providers “have been asking for a 7% increase.”

In North Carolina, auto insurance providers have petitioned state regulators with a demand to increase rates by 13%. Meanwhile, auto insurance providers throughout the state of Illinois have been increasing their rates as well, by amounts ranging from 3% with State Farm, to 13% for the United Services Automobile Association.

The Insurance Information Institute reports that, across America, premiums on auto insurance have gone up at a yearly rate of 1.7% thus far this year. Although California and a few other states continue to report decreases in auto insurance rates, these states are proving the exception rather than the rule.

Moreover, the raises in rates aren’t part of an ongoing trend. Quite the opposite: auto insurance rates have stayed constant, or have even gone down a little, throughout 2005, 2006, and 2007. Throughout those years, statewide efforts to combat unsafe driving practices and insurance fraud have contributed to the positive statistics.

Auto insurance companies cite their own statistics as justification for their decisions to raise rates. There haven’t necessarily been fewer accidents on the road, despite the decrease in motorist activity, say the insurance providers. Meanwhile, such variables as America’s current high inflation rate, and the rising costs of automobile materials are increasing the expense of paying insurers’ claims.