• Aug 1, 2006

The good news for auto insurance companies is that claims have dropped 15% in the last four years, with the result of a similarly healthy bump in profit. The bad news, at least for an industry that depends on the reliable statistical prediction of trends, is that there is no clear reason for the reduction in payouts for dented sheetmetal and bodily injury.

While modern technology can help prevent collisions, it likely doesn't account for the drop in this particular five-year period (but, check back in another half-decade). More likely is that drivers in the 45-64 age group are the safest on the road, and the average driver continues to get older as the Baby Boomers age. Additionally, it's thought that many drivers opt not to report accidents that don't involve any injuries, and contemporary safety technology may account for an increased number of people who walk away from an accident without so much as a scratch.

One thing seems certain - insurance companies may be making more money from this trend, but it's not being reflected in the average insurance premium. What a surprise, eh?

[Source: Chicago Business via Instapundit]



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  • 29 Comments
      • 8 Years Ago
      The first thing to remember is that the insurance industry is a free market, with a number of companies pricing their coverage at a loss before interest kicks in. Prices will fall if the insurance companies believe it is possible.

      The fact they havent fallen reflects their uncertainty about the current market behaviour.

      So why are they falling?

      The TREAD act is forcing companies to make better cars and instigate recalls. It wont be long before the insurers star using ODI data to monitor vehicle quality and start claiming back costs from manufacturers for poor quality and dangerous products.


      • 8 Years Ago
      Mike, one of the benefits of Military Service. I wish there were more ins. cos. with their sense of respect to their customers.
      Ghuughes. Welcome to insurance profit 101. I'd like to know how I pay $10,000+ in premiums and have one minor fenderbender ($700 damage) they raise my rates. I only reported it because I thought my health ins. wouldn't pay the medical expenses. Turns out, my motorcycle policy didn't have medical coverage any way, so I didn't need them. I'd have paid the $700 out of pocket instead of taking the $200 increase in premiums. That's recovering their payout several times over.
      Why do I pay premiums then?
      • 8 Years Ago
      To those of you complaining of rate increases, have you ever considered shopping around? I'm an independent agent, all I do most of the day is compare the rates of different companies for people. There can be a great deal of variation from company A to company B! I've done my homework on companies, and some of the bigger-name companies are some of the ones that are least concerned with taking care of you...
      • 8 Years Ago
      Au contraire, #1. My insurer, CSAA, can't even do that aside from "rates just changed." I would expect rates to go down as my car depreciates year after year. But hey, like extortion, so it is what it is.
      • 8 Years Ago
      my rate for insurance has dropped about 20% this year, nice suprice,

      helping factor: clean record

      than again I don't drink, play video games, or watch movies when I drive !
      • 8 Years Ago
      State Farm Florida just raised my car rates 50% because "of the increase in paid claims here in our state". And they just got approval for a 50% increase in homeowners insurance. But I'm lucky to have State Farm's homeowners insurance so I just shut up and pay it.
      • 8 Years Ago
      From a person who is a claims adjustor for an insurance company...

      Yeah the number of accidents maybe going down, but the costs to fix cars are going up. Just replacing one airbag can cost $400-$1000. A xeon light, $300-$1500. Also rates change due to changes in an area or zipcode. Like theft increases or due to weather more accidents, etc.

      Everyone complains about having to pay insurance premiums. Just wait until you total out a $65,000 car, your car gets stolen or even worse kill someone. That $10,000 you spend on premiums will be looking like a good deal.

      And if you are more likely to get into an accident, you should pay more. Why should I pay more for YOUR driving?
      • 8 Years Ago
      I got my policy renewals yesterday here in SW Florida, and to my suprise my motorcycle rate went down by $180 per year (2 motorcyles), but my car insurance (1 car and 1 truck) went up $190 per year. Thanks alot Progressive.
      • 8 Years Ago
      Or, How about you're charged because of your Zip code, good driving or not, regardless of your own personal driving record?

      ATTENTION!! ANKLES AT THE READY! BENDOVER!!! SECOND COLUMN (Insurance companies) INSERT!!!!!!!!!!!!
      bill
      • 8 Years Ago
      Where are the rate cuts, then? Its kind of like hurricane insurance - no hurricanes for 45 years in Florida, rates not cut, now they are tripling after a few bad years.
      • 8 Years Ago
      Miles driven may have decreased recently also. If people are driving fewer miles, carpooling or taking public transit to save gas money, fewer accidents. How big a factor I have no clue.
      • 8 Years Ago
      Here's the reason why: Most people with collision insurance have a $500 deductible to keep the premium down. You get hit by someone. The fender bender costs $700 to repair. You have to pay out the $700 before the insurance company pays you $200 after the deductible. When the insurance company goes after the after guy's insurance company, they are just looking to recoup their $200, they don't care about your $500 you're already out. So not only are you likely screwed out of $500, your premium goes up. So that's why you see more folks driving around with scraped-up cars -- it makes no sense to file a claim. At least, that's the way it is with Geico.

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