By Piyawat Nandeenopparit @ Shutterstock.com
As prices of nearly everything soar during the Biden era, now the price of car insurance is rising as well. Leslie Scism reports in The Wall Street Journal:
Car insurers are rapidly raising rates to try to get ahead of inflation, which has boosted the prices of car repairs, replacements and rentals.
Many insurers are boosting premiums by 6% to 8% while some are asking for double-digit increases, according to industry executives and analysts. The rising rates are an example of inflation leading to more price increases as businesses try to compensate for higher costs.
After having a stellar year when lockdowns kept many drivers off the roads, insurers struggled in the second half of 2021. Auto insurers posted dismal fourth-quarter results, and laid out plans to raise rates. During 2020, many insurers gave consumers rebates and some modestly reduced rates.
Car and home insurer Allstate Corp. ALL -0.93% is raising rates by an average of 7.1% across 25 states, its executives said on an earnings call, and more increases are ahead.
“We are continuing to go at a very fast pace across other states and even in some cases, the same states again, with rate increases as we get new data and new trends,” Glenn Shapiro, a senior Allstate executive, said.
Insurers are feeling pressure on all sides of their business. Traffic is at or near pre-pandemic levels across the U.S., and accidents have risen from their lockdown lows.
More accidents mean more replacement cars and repairs. Used-car prices have soared as semiconductor chip shortages reduced the supply of new cars. The higher prices are reflected in insurer payments for totaled vehicles.
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