Rates soaring; experts explain why

Cars weaving through traffic at 90 mph beneath billboards touting personal injury lawyers are a fact of life in much of Connecticut in 2024 -- as is sharing the road with a growing fleet of electric cars and other high-tech vehicles.

Experts say you can blame those three factors for much of the spike in auto insurance premiums in Connecticut this year: Dangerous driving, hungry lawyers and increasingly complicated cars on the state's roads are costing us all money.

Approved car insurance rates jumped by 10.7 percent in Connecticut in 2024, more than double the national average hike of 4.8 percent, according to data from S&P Global Market Intelligence. The increase reflects rates charged by the 10 largest companies, representing 80 percent of the auto insurance market.

"There's a reason that people are starting to get cranky," said Brian P. Sullivan, an auto insurance industry analyst who collated the S&P data. "In the last two years, Connecticut has seen big rate increases."

Car insurance rates nationwide have risen steadily for a decade but have spiked since 2022, according to U.S. Bureau of Labor Statistics data.

But premiums would be a lot higher if auto insurers could get the rates that they want when you factor in their losses in recent years. Connecticut residents tend to drive newer cars that are increasingly expensive to repair, and a surge in serious accidents in the state is taking a higher toll in both lives and costs, experts say.

"The most important thing to know is that auto insurance prices go up when claims go up, that's the No. 1 driver," Sullivan said. "So the question isn't so much why your price is going up, it's why claims are going up."

Dangerous driving outlasts pandemic

Spending some time driving on the interstate highways in Connecticut quickly answers one part of why car insurance claims are higher: Drivers are running wild out there. There's more speeding, distracted driving and disregard of pedestrians and work zones. Bad habits picked up driving on empty roads during the pandemic have persisted nationwide, according to safety experts.

A recent spate of wrong-way crashes and a series of high-profile highway deaths in Connecticut have highlighted the problem, with state lawmakers vowing more enforcement on the roads.

Deaths on Connecticut roads surged to 366 in 2022 -- the worst year for traffic fatalities since 1989, according to the state Department of Transportation. Although the number of deaths dropped slightly, speeding remains a problem.

Crashes at high speed cause more deaths, serious injuries and damage, driving up costs for all involved. And repairing that damage is more costly than ever due to the sensors, batteries and computers that are now standard in newer cars.

A windshield repair that could be done in a parking lot for a few hundred dollars a decade ago now requires recalibration of sensors and thousands of dollars in labor and parts. The worker who fixes that windshield is no longer a backyard tinkerer who is good with a wrench, but a highly skilled technician with extensive training -- and an hourly rate to match.

"Cars are becoming more and more complicated every single day," Sullivan said. "Every day an older car without sensors and things like that is being replaced by a newer car which is much more difficult to repair."

'Perfect storm' hikes insurance costs

The combination of dangerous driving and increasingly complex cars is creating "a perfect storm," for both policy holders and insurers," said Gregory Smolan, vice president of insurance operations for AAA Northeast.

"Simple accidents are costing a lot more, and on top of that, you're seeing people driving at faster speeds," Smolan said. "So losses that are happening are actually causing more damage and more bodily injury." AAA is joining with lawmakers to urge people to slow down and return to safer pre-pandemic driving habits, he said.

Another factor driving up losses for insurers is auto theft, which has crept up in recent years in Connecticut, especially in cities. Add to that intensifying storms which topple trees onto vehicles and cause floods that can quickly and catastrophically damage cars.

"People think of homeowners first when they think of (weather damage), but that also has an impact on vehicles," Smolan said. "We've even seen in the Northeast, which was very uncommon in the past, some hail."

The dents and windshield damage caused by hail can cost thousands to fix and repairs are fully covered by comprehensive policies.

Although Connecticut has escaped major catastrophes so far, trends toward more damaging weather and higher costs affect all states, Sullivan said. "This is nationwide, and no state is immune."

Another factor in premium increases relates to those jokey billboards advertising personal injury lawyers along the highways. Attorneys in private practice are taking on more accident cases than in the past, further driving up costs for insurers.

"The percentage of auto accidents that involve attorneys fighting for the last nickel, engaging doctors and chiropractors to make sure they can drive up the costs, that has risen substantially in the last several years," Sullivan said.

"What used to be a quick and easy settlement is now a long and protracted fight."

State regulators moderate rate hikes

In all, Connecticut drivers are pretty fortunate in having more than 100 different companies to choose from when buying auto insurance, said George Bradner, assistant deputy commissioner and director of the Property & Casualty Division at the state Insurance Department. States like Florida have seen an exodus by major auto insurers due to issues around fraud and natural disasters -- causing premiums to skyrocket.

Insurers still want to do business in Connecticut, but don't want to lose money in the process.

"The industry is coming in and they're showing the losses," Bradner said. "We do need to make sure that the companies are there ... availability is critical."

And when you factor in the cost of living and our state's love of high-tech cars, Connecticut is about in the middle of the pack nationwide when it comes to car insurance affordability, according to data from the National Association of Insurance Commissioners.

Connecticut ranked No. 26 among states in ranking of auto insurance costs as a percentage of average household income in 2022, the most recent NAIC data available. Residents of states like Louisiana, Florida and Mississippi pay the most compared to average incomes, and those in North Dakota, New Hampshire and Hawaii pay the least.

Even with our relatively high premiums, Connecticut's insurance department saved drivers $123 million in 2023 by holding down insurance rates, Bradner said. The state negotiates with insurers when they submit rates for approval to moderate increases.

"If we think they're being too aggressive on their trends, we push back on them," Bradner said. Since 2021, the state dialed back rate requests to the tune of $250 million in savings for auto insurance customers.

With so many companies vying for Connecticut's auto insurance business, drivers can save by shopping around, Bradner said. If you've been with a company for a while with no accidents, try bargaining with them for a lower rate.

"We have a very competitive marketplace in Connecticut," Bradner said. "But be smart when you shop. You have to consider everything -- the claims handling of a company and their reputation."

Taking into consideration cost of living and insurers' losses in recent years, "Connecticut's premiums are right where they should be," Sullivan said. "Connecticut residents are suffering with higher prices because all the factors we discussed are driving up the cost of car insurance."

As for rates going down anytime soon?

"I can't see a single reason why they would in the near term," Sullivan said.

Smolan of AAA said he understands the ongoing frustration of drivers facing escalating insurance costs. AAA advises drivers to pay their premiums in full and bundle homeowners and auto coverage to save on insurance. Opting to pay a higher deductible can also lower your premium.

"If I haven't had a violation or I haven't had an accident and my car's a year older, I should be paying less, not more," Smolan said, echoing customer concerns about recent price increases. "We're trying to do our best to educate them on the reason why, but there's absolutely frustration with folks. Because again, it's just another expense that's increasing."