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.
MattCorc 