If you’ve noticed your car insurance premiums have gone up, you’re not alone.
According to a report by Insurify, car insurance rates for drivers in Pennsylvania are projected to increase 35% by the end of this year as insurance companies keep up with soaring repair costs, more frequent accident claims and a surge in severe weather events.
Rates had already jumped 23% by July, but there’s more to come, according to the report. Later this year, the other shoe is set to drop with an additional 12% increase that will be levied on drivers by insurance companies.
“We’ve seen the biggest period for rate activity in the past year to 18 months, so it’s possible that a lot of drivers have already been hit by at least one decent rate increase,” said Chase Gardner, data insights manager at Insurify.
In Pennsylvania, the average annual cost of full coverage car insurance in June was $1,898. By the end of the year, average insurance rates in this state are projected increase to $2,073.
Pennsylvania is not alone. Insurify, an online marketplace for car insurance providers, projects car insurance premiums nationwide will increase by 22% this year.
A spokesperson for the Pennsylvania Insurance Department could not comment on car insurance rate increases. A representative for State Farm, the largest insurance carrier in the state, also declined to comment on automobile insurance rate increases.
Mr. Gardner said Insurify arrived at its projections based on an analysis of the losses suffered by insurance companies — meaning the amount of money the companies pay out for claims — and the amount of money the companies collect in premiums.
“They try to keep that in a tight balance,” Mr. Gardner said. “In the past couple of years, it’s gotten out of whack. Its gotten pretty high. They are paying out way more.”
Insurify analyzes profit and loss data from previous years to predict how much premiums will go up the next year.
“It’s a pretty solid metric,” he said, adding that it’s only part of the equation. While the loss ratio in the previous year can explain more than half of the premium increase for the next year, there are other factors, and it’s a ballpark number, he said.
“It’s not going to be exactly 35%, but it’s in the general ballpark, and we’re pretty confident about that,” Mr. Gardner said.
Rate increases in 2024 are largely a continuation of hikes in 2023, according to the report, a year that saw full coverage premiums rise by 24% in response to insurers’ record underwriting losses [$33.1 billion] in the prior year.
Although underwriting losses decreased to $17 billion in 2023, the financial hit was still substantial enough to drive significant rate hikes in the first half of 2024, Insurify said in its report.
Pennsylvania’s rate increase will be higher than average, but far from the highest.
California, Missouri, and Minnesota could see insurance costs increase by more than 50% in 2024. Damages from severe storms and wildfires contribute to rising rates in those states, Insurify said.
Maryland has the highest car insurance costs in the U.S., with an average full coverage rate of $3,400 annually. New Hampshire drivers pay the least — an average of $1,000 annually, according to Insurify.
Insurance companies are grappling with higher costs as they raise premiums. Vehicle maintenance and repair costs have increased by nearly 38% over the past five years, according to the Bureau or Labor Statistics Consumer Price Index.
Increasingly severe and more frequent weather event also are driving up auto insurance premiums. Hail-related auto claims represented 11.8% of all comprehensive claims in 2023, up from 9% in 2020, according to CCC Intelligent Solutions.
First Published: August 17, 2024, 9:30 a.m.
Updated: August 17, 2024, 11:09 p.m.