In a recent interview with CNBC, Dr. Michel Léonard, Triple-I vice president and senior economist, explained how the return to pre-pandemic driving levels is resulting in higher auto accident rates.
More accidents mean a larger volume of more expensive claims for insurers to pay because of higher repair costs, delays in repair time due to chip shortages, supply chain disruptions and a labor crunch.
The consumer price index showed that the auto insurance index was up 16.9 percent in May from the previous year, following a 6.4 percent rise in April from the previous year.
Elyse Greenspan, a managing director at Wells Fargo, said the year-over-year increase resulted from the premium base in May 2020, reflecting pandemic-related refunds. Triple-I analysis shows that due to the sharp declines in the number of miles driven, U.S. auto insurers returned $14 billion to their customers last year.
Greenspan describes the current auto insurance market as still soft even after recent rate increases. Not all insurers are raising rates, she added. “It’s still a good environment for consumers who are purchasing auto insurance.”