The Trend of Auto Insurance Rates in the Past 10 Years

by Darwin on August 18, 2013

Due to increased government regulations, auto insurance rates have risen steadily for most of the past ten years. At the same time, rates have not inflated as fast as many industry watchers expected. Many insurance companies have deferred rate hikes to compensate for a major lack of demand for upper-level insurance packages. Particularly during the last six years, many cash-strapped car owners have avoided any coverage options above or beyond mandatory liability insurance.

Since 2003, the contraction of new car sales has also kept auto insurance rates fairly reasonable. Even before the global financial crisis set in, new car sales were stagnating as automobiles reached maximal market saturation. The unfolding downturn only served to further degrade new unit sales in favor of used sales. Naturally, motorists are less willing to pay large sums to insure their used cars. This is one of many factors that has restrained growth in insurance costs.

The growth and development of the Internet has also affected auto insurance quotes comparisons. As more people use computers and mobile Internet devices to shop for insurance, auto insurance startups and smaller companies are able to reach a wider audience. Though smaller insurers may struggle in the competitive insurance market, they are often quite willing to offer below-market rates as they attempt to establish their brands. While newer insurers may not offer the long-term stability of industry giants, they serve the useful purpose of driving down overall insurance rates.

The growth of technology has greatly affected insurance rates in the past few years. A large number of websites provide multiple auto insurance quotes in convenient packages. Over the past decade, these sites have brought a new level of transparency to the automotive industry. Insurance companies are no longer as free to make vague claims about matching or surpassing their competitors. With the development of the mobile Internet, people can compare and contrast auto insurance rates with instant precision.

In recent years, the regulatory environment for the insurance industry has grown increasingly complex and difficult to navigate. Some industry experts predict that auto insurance rates will increase dramatically in the next few years. Consumers can possibly save large sums by purchasing policies now instead of later.

While auto insurance rates have slowly risen over the past decade, they have remained fairly static over the past two years. In specific regions like California, rates have even dipped slightly. To keep insurance rates reasonably low, the public should strike a balance between consumer advocacy and maintaining the regulatory status quo. While advocacy groups may have admirable goals, they routinely overlook the cost inflation effects of increased regulations. While the auto insurance industry could do more to improve transparency and accountability, they currently do fairly well at serving the public. In other words, there is no consumer protection crisis in the industry. Compared to the health insurance sector, the auto insurance industry has a fairly positive customer service history. Overly intrusive government regulations may well end the era of affordable auto insurance.

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