Triple-I: Inflation, Reckless Driving, Legal System Abuse Taking Toll on Auto Insurance Industry



Contact: Loretta Worters, Insurance Information Institute (Triple-I), 917-208-8842;  


NEW YORK, Oct. 12, 2022— The U.S. personal auto insurance market is being hit hard in this inflationary environment, with sharp deteriorations in combined and loss ratios expected to continue for the foreseeable future, according to the Insurance Information Institute (Triple-I),


In its just updated 2022 Trends and Insights: Personal Auto Insurance Rates, the Triple-I noted the combined ratio – a measure of profitability used by insurers to gauge how well they are performing –for personal auto had worsened quickly from 92.5 in 2020, which had been the industry’s best underwriting result in at least 25 years, to more than 105 forecast for 2022.  A combined ratio of 100 indicates insurers are paying out $1 in claims and expenses for every premium $1 collected.  A loss ratio is the percentage of each premium dollar an insurer spends on claims.


While insurers’ personal auto loss ratios fell precipitously in Q2 2020, they have climbed steadily to far exceed pre-pandemic levels as more drivers returned to the road in 2022 with riskier driving behaviors. Factors driving adverse auto insurer economic performance include:


  • Rising insurer losses due to increasing accident frequency and severity
  • Record level fatalities and injuries on the road
  • Continuing supply-chain issues, leading to rising costs for autos, replacement parts, and labor
  • More costly auto repairs due to safer, more technologically sophisticated vehicles
  • Over inflated claims payouts because of legal system abuse by personal injury attorneys


At the beginning of the pandemic (Q2 2020), the personal auto loss ratio was 47.5, compared with 78.2 in Q2 2022.  Among the top five U.S. auto insurers, the liability loss ratios topped 80 in the quarter ending on June 30, 2022. Liability coverages are the primary components of a personal auto insurance policy and pay for the policyholder’s legal responsibility to others for property damage and bodily injury.


“The industry’s recent deteriorating performance in liability coverages may reflect increased litigation as courts re-open with the waning of the COVID-19 pandemic,” said Dale Porfilio, chief insurance officer, Triple-I. “More lawsuits — combined with increased accident frequency and severity, fatalities, and replacement costs — indicate the need for higher personal auto insurance rates.”


To remain financially viable, insurers must set rates at levels appropriate to the risks they cover. Auto rates, the benchmark upon which premiums are set, reflect a range of factors.  At the individual level, the insurer assesses the vehicle, policyholder, their location, and vehicle use and how they contribute to the insurer’s loss experience. At the start of the pandemic, auto insurers – anticipating fewer accidents amid the economic lockdown – gave back approximately $14 billion to policyholders in the form of cash refunds and account credits.


Growth in personal auto insurance premiums have remained relatively flat, despite significant increases in the consumer price index (CPI), vehicle prices, and the cost of auto replacement parts. Nonetheless, all these variables have combined to keep upward pressure on what policyholders pay for personal auto insurance coverage, the Triple-I Issues Brief stated.




Issues Brief:    Triple-I State of the Risk: Social Inflation and Legal System Abuse

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