A lot of people think working in the insurance industry would be boring and non-eventful. Today’s market is anything but. Auto has been a challenging line of business in the industry for quite some time. Consumers often ask, “Why does the premium continue to climb?” Is there an end in sight when this will stop?” The answer is yes and no. As a consumer, you do have options and actions you can take that can help put the insurance carrier’s mind at ease and receive some relief in rate. Before we talk about those, let’s discuss some of the driving factors causing the increases. There are several. However, here are a couple of critical ones that are large contributors to these rising premiums:
- The pandemic. Even though it is mostly in the rear-view mirror, we are still feeling the impacts. Supply chain issues and trying to secure parts for vehicle repairs has become challenging. Some parts were discontinued to channel as much production into other areas of manufacturing as possible. This seemed to be for the greater good, until an accident occurred that in the pre-pandemic would have been a non-issue in getting the vehicle repaired and back on the road in a timely manner. Nowadays, many of the parts are obsolete, or so far back ordered it’s creating a domino effect of other problems as it relates to cost. Increased auto rental costs have skyrocketed, and vehicles that wouldn’t have been totaled are now being totaled. Then, trying to replace the vehicle is a challenge in itself. According to AP data, used cars are up nearly 50% from pre-pandemic levels and have an average price of over $27,000.00. So, couple those items and the cost has gotten way out of whack.
- We all love the new technology. It’s fun, it’s convenient, and it makes operating a vehicle safer due to hands-free features. These features are amazing—how did we ever live without them?! However, these vehicles are becoming more complex to fix, and when they do need repairs, costs have been significantly higher than in the past.
- Nuclear verdicts—claims in excess of $10 million—are hitting more often. Many of these are contributed to a couple of key items:
- Vehicle neglect. The vehicle’s maintenance has been postponed from mechanical to tires, brakes, and everything in between. Inflation is pinching businesses, causing them to not follow proper maintenance requirements which puts vehicles on the roads that are not safe to operate.
- Distracted driving. We have all seen it—a vehicle swaying left and right because the driver is hammering out emails, checking social media, or sending texts. Losses due to accidents from these scenarios have skyrocketed and show no signs of slowing down.
Now that we understand what’s causing the increases, what can we do to help manage those costs and protect ourselves?
- Employ employee handbooks that outline driving guidelines for the organization. These should stipulate how and when a mobile device can be utilized. Go through this with employees, both current and new hires, regularly.
- Create a company maintenance log and require daily vehicle checks for all vehicles. This will help manage and make sure you stay current on your maintenance. The daily vehicle inspection will help identify areas where your vehicle may need attention in the near future. You can then relay that information through the proper channels so the company is aware of things that need replacement or attention.
- Installation of telematics. You can secure these through a variety of companies, and they are cost effective tools. You can be notified if harsh breaking, turning, or acceleration has occurred. This will also track GPS and help you manage where your vehicles have been and are traveling throughout the day.
- Installation of dash cameras. These have been a huge help in defending businesses. So often an accident becomes a “he said/she said” situation. By having a dash cam, it will provide footage to the insurance company that will be working with you to help get you and your vehicle repaired by the responsible party.
In conclusion, the auto industry is changing. But there are tools and resources available that can help protect you and your ability to secure insurance and receive the best pricing. Between your own loss record and investment into some of these safety devices, it will help get you better pricing and protection than someone who does not have these safety controls in place.