According to papers acquired by Axios, the cost of vehicle and house insurance is rapidly increasing as Texas underwriters hike rates to keep up with inflation, rising mechanics’ salaries, and ballooning building expenses.
The larger picture: During the epidemic, average vehicle insurance premiums fell as Texans drove considerably less and firms lowered prices to keep and acquire clients.
However, at least three major insurance firms have recently warned Texas insurance brokers to expect increased prices.
What they’re saying: “A rate increase is required to address worsening profitability of the personal car program,” according to a Germania Insurance “secret” advisory to agents outlining the causes for a statewide 9 percent auto rate hike, on average, beginning this month.
The newsletter from Germania, situated in Brenham, focuses on claim frequency and severity.
“As driving habits stabilize after the epidemic, the number of claims has grown. Texans are driving more and getting into more accidents.”
“Auto repair shop expenses for vehicle components and labor continue to rise, new and used vehicle prices remain high, and delays in acquiring parts have delayed the claims process.”
Travelers Insurance is playing a similar song, informing agents that weather, labor shortages, supply chain challenges, and an increase in the frequency of fatal collisions – most likely due to distracted driving — are all pushing up vehicle insurance prices.
Meanwhile, according to another industry bulletin received by Axios, Safeco Insurance noticed that “some policyholders would understandably object at the increased prices.”
“To assist establish expectations and limit renewal shopping,” the business has been testing the usage of a “How inflation impacts your premium” pop-up link in online customer accounts as a heads-up about increasing rates and the causes causing them.
Zoom out: According to the Insurance Information Institute, homeowner premiums are rising 12.2 percent on average nationally from 2017 to 2021.
On the car side, catalytic converter theft insurance claims surged 1,215 percent between 2019 and 2021, with Texas reporting the nation’s second highest number of catalytic converter theft insurance claims.
“We always advise customers to shop about, take advantage of any reductions given by an insurer, and to take a thorough look at their insurance requirements and deductible levels,” said Albert Betts, executive director of the Insurance Council of Texas, a trade organization.
“What customers are witnessing today is a response to rising losses and rising prices of the components of a claim, such as repair and replacement of damage to a house or automobile,” Betts said.
According to the Insurance Council of Texas, vehicle insurers in the United States spent around $1 on claims and expenditures for every $1 in premiums received last year.
What you should know: The Texas Department of Insurance, as well as organizations like The Zebra, provide a handy purchasing tool.
Earlier this year, we conducted a “Very Best Day in Austin” interview with Zebra’s chief data officer.
What we’re watching: Will insurance premiums reduce if and when inflation slows, supply chain difficulties are fixed, and everyone learns to drive without texting (which is illegal in Texas)?
