Study looks at causes of auto insurance cost increases

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The American Property Casualty Insurance Association (APCIA) maintains its recently composed white paper attributes increased claims costs and delays to rising auto accident frequency and auto insurance market severity.

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Per the APCIA analysis, other contributing factors to insurance cost increases include the challenge of balancing vehicles and parts supply and demand amid the COVID-19 pandemic.

“This new study highlights recent trends in the U.S. auto insurance market that are leading to increased claim costs and impacting consumers,” Karen Collins, assistant vice president, personal lines for APCIA, said. “There has been a rapid rise in the number of auto accidents and in the severity of accidents. At the onset of the pandemic, there was an initial decline in the number of miles driven. However, that quickly changed as we emerged from the stay-at-home orders and Americans are now driving more. In fact, driving has returned to near pre-pandemic levels.”

Per the APCIA, driving behavior is increasingly riskier and the nation’s roads are more dangerous although there is greater access to improved vehicle technology and a temporary drop in traffic congestion.

Additionally, the white paper found that the number of auto crashes has risen and there has been a rise in medical care costs. Also, it said the nation has experienced significant vehicle shortages and major delays in auto repairs.

“With data showing a sharp rise in the cost of auto insurance claims during 2021, this has a direct impact on families, individuals, and businesses,” Collins said. “The intersection of an improving economy, the rise in more dangerous driving behavior, rising numbers of injuries, an increase in vehicle costs due to the severe supply and demand imbalances, and COVID-19 related global shipping challenges are together creating significant upward pressure on auto insurance pricing.”

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