Car Insurance Texas Rates Increase

Car Insurance Texas Rates Increase

Are higher car insurance rates coming? Ask the residents of Georgia, where Allstate Property & Casualty Insurance has just raised some auto premiums by 58 percent.

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The Good Hands People have claimed that’s an extreme case, but it doesn’t deny that nearly half its Georgia customers will pay an average of 25 percent more to drive their cars, a rate hike that left the state’s insurance commissioner, Ralph Hudgens, so frustrated that he launched an investigation by an independent actuarial firm.

But since Georgia is a “file and use” state, this means all an automotive insurer has to do is file the rate hike with the state’s insurance department, and it goes into effect, in this case on May 22.

Georgia’s situation is far from unique, and it may be the “canary in the coal mine” as far as auto insurance rate hikes are concerned. April saw the biggest premium increase year-over-year since 2003, as prices rose 6 percent that month, according to Consumer Price Index monthly data.

Allstate spokesman Adam Polak said his company was “cooperating with the Georgia investigation” and said that only a few customers faced a 58 percent hike.

But he also indicated that Allstate’s rate hikes clearly reflect what’s coming down the turnpike for drivers in other states. Industry spokespeople aren’t shy about saying car insurance is likely to go up, up, up. And while Georgia may be the first state to feel the pain in the pocketbook, it won’t be the last.

Among the reasons: “More people are driving, lower gas prices and higher speed limits,” explained Robert Hartwig, president of the Insurance Information Institute (III), a lobbying group for the property-casualty insurance industry.

And, he might have added, more fatalities. The National Safety Council (NSC) estimates that 38,300 people were killed nationwide on roads last year and 4.4 million were seriously injured. “2015 was likely the deadliest driving year since 2008,” said the NSC, a nonprofit organization that promotes health and safety in the U.S.

Another factor is that auto insurers’ profitability has been falling for a decade. Loss ratios for insurers have been rising for 10 years, according to the III’s Hartwig. In flush times when interest rates are high, insurers can make this up from their vast investment portfolios. But the 2015 return on their net worth is likely close to zero — or even negative.

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