Insurance News
Commercial Auto Insurance Premiums Expected to Rise Throughout 2022?
Highlights:
Industry experts predict an average 10 to 25% increase in commercial auto insurance premiums
According to S&P Global Market Intelligence data, the average rate increase filing is about 4.9 percent.
In 2022, policyholders should be prepared for telematics that tracks their car’s location. This information will be used to help determine rates and policy decisions.
With the rise in economic inflation, the commercial insurance industry is seeing a significant rise in annual premiums. The inflation rate has risen from 7% in December 2021 to 7.5% in January 2022, the highest levels seen in almost four decades. The spike in demand for goods, materials and labor has driven up the cost of first-party coverage.
Industry experts expect new driving technology to usher in a further 10% to 20% rise in commercial auto premiums. The new tracking technology and driving metrics will significantly impact how people are insured for both personal and commercial vehicles.
The commercial auto business has been largely unprofitable for insurance companies for over a decade. In 2019, carriers were seen to be struggling to find eligible policy buyers. And with the price hikes in construction materials, rental vehicles and auto parts, insurers may face more losses moving forward.
Dormant insurers as well as new insurers have become more active, pushing the auto insurance industry into a massive shift. This shift will usher in new products, services, and a newer business mindset. Conversely, the industry has seen increased premiums for over four decades. Despite the increase, AM Best reported over $22 billion in underwriting losses. The spike in premiums is also likely to continue due to litigation trends and driver shortages caused by hiring restrictions. Hence, as per Bankrate, nearly 2 million policyholders will further experience an average rate increase of about 14 percent.
Auto insurance companies around the country are reporting rate modifications, many of which are rate increases. The S&P Global Market Intelligence data shows that the average rate increase filing is roughly 4.9%. Car insurance premiums currently average $1,771 per year for full coverage, but this will rise to $1,858 per year in the near future. Since unsafe driving habits and road accidents contribute to higher premiums, insurers require adequate prior protection against claims that can’t just come out-of-pocket without help.
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