The operative word contributing to higher auto insurance costs is "more."
The NAMIC paper is based on an analysis of extensive federal, state, and industry data related to driving patterns, behaviors, and costs of modern vehicle ownership and insurance. It targets three key stakeholders – consumers, policymakers, and insurers.
"There's an important story to be told, and it starts with the fact that most costs involved in providing auto insurance are driven by external forces outside the control of auto insurers," said Tony Cotto, NAMIC's director of Auto and Underwriting Policy. "Among those cost factors are the number of autos on the road, auto and road design, driver behavior, and weather."
In fact, NAMIC discovered the operative word contributing to higher auto insurance costs is "more":
More drivers on the road than ever before – Now estimated at 230 million drivers;
More distracted driving – Driver inattention accounted for nearly 1 million crashes in 2019;
More impaired driving – 10,000 lives were lost to alcohol-impaired driving in 2019;
More expensive cars, parts, and repair processes – The average cost of a new car in 2021 is $40,000;
More expensive medical care – From 2010 to 2017, bodily injury claim frequency increased every year, accompanied by increases in claim severity of nearly 30 percent;
More extreme weather – The percentage of dollars paid out in catastrophe-related auto claims is up more than 4 percent since 2011;
More theft and fraud – Auto thefts increased by 9.2% percent in 2020, after declining in the two years prior; and
More drivers skipping purchasing insurance – The percentage of drivers nationwide who are uninsured is 12.6 percent.
As the dozens of external cost drivers related to vehicle ownership and driving become increasingly more complex, Cotto says the continued study of those influences is necessary to inform sound public policy. Among the solutions offered by NAMIC are preserving consumer choice and data privacy, promoting sound underwriting, enhancing the study, education, and enforcement of auto-related laws, and tort reform.
"No one is more invested in ensuring available and affordable access to auto insurance than the insurance industry," Cotto said. "We are ready to roll up our sleeves and join our allies to find solutions that protect policyholders and make driving safer for everyone."
ABOUT NAMIC The National Association of Mutual Insurance Companies is the largest property/casualty insurance trade group with a diverse membership of more than 1,500 local, regional, and national member companies, including seven of the top 10 property/casualty insurers in the United States. NAMIC members lead the personal lines sector representing 66 percent of the homeowner's insurance market and 53 percent of the auto market.