Could the Auto Insurance Market be Stabilizing?

The auto insurance has been one of the few insurance lines that has seen rates hikes on a consistent basis over the last few years. This has been driven by what you think would drive it – unprofitability (excuse the pun). However, according to Fitch, for the first time since 2007 the personal auto insurance market has posted an underwriting profit.

Profitability does not necessarily rate decreases as the market is still reeling from years of losses. Stabilization could be on the horizon, however, as claims frequency is showing a downward trend. The big unknown will be medical costs and litigation costs. The other unknown is how all of the new safety features that vehicles now have will impact both frequency and severity. Finally, the amount of surplus in the insurance market is at an all-time high which simply means there is more cushion and capacity for insurance carriers. That could spur new entrants into the market if the underwriting trends continue and that of course can lead to more competition and better pricing.

For a more in-depth look at this issue I suggest checking out this article in Insurance Journal.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s