Triple-I Offers U.S. Insights into Auto Insurer Pricing Factors


For immediate release
New York Press Office: Michael Barry, 917-923-8245,

NEW YORK, July 29, 2021—Lower risk drivers should pay less for auto insurance and its cost has closely tracked broader U.S. economic trends for decades, the Insurance Information Institute (Triple-I) stated in response to a federal governmental Request for Information (RFI).

In a letter submitted this week to the U.S. Treasury Department’s Federal Insurance Office (FIO), the Triple-I said U.S. auto insurers accurately price their policies by using a wide variety of rating factors. All these factors must conform to the laws and regulations of the state in which the auto insurance policies are sold.

“There is no credible evidence that insurers charge more than they should, either across the broad market or in specific subsegments such as neighborhood, race, income, education or occupation,” the Triple-I stated. The letter added the rating factors U.S. auto insurers use to price their policies not only serve their purpose but are constantly retested to ensure their accuracy and reliability.

“If rating factors do their job well, they make insurance relatively inexpensive for some people and quite expensive for others. In both cases, the assessment is correct. Drivers who present less risk pay less for coverage,” the Triple-I said.

The Triple-I response to FIO’s RFI highlighted how the appropriate price for an insurance policy varies greatly from customer-to-customer, and from state-to-state. Insurance is regulated by state governments.

“Insurance companies and their actuaries have focused on finding factors that make sure every customer pays the appropriate rate,” the Triple-I said. Rates are based on historical loss experience for similar risks. Premiums constitute the price customers pay for insurance coverage. 

Critics of U.S. auto insurer pricing practices have expressed concerns that certain rating factors, such as credit-based insurance scores and the geographic location of the customer’s residence, discriminate against lower-income drivers and minority groups.

The Triple-I explained that eliminating any rating factor – for whatever reason – forces those with lesser risk to overpay for auto insurance and allows those with greater risk to pay less than they should for auto insurance.

“Eliminating factors does not affect the truth that they reveal, and if factors reveal that costs need to be high for a customer, banning them does nothing to change the underlying costs that are the reason the rate is high,” the Triple-I stated.

Extensive research conducted by the Triple-I shows how the rising cost of claims has been the primary factor generating increased auto insurance rates over five decades (1963-2013).

For instance, the size of the average auto property damage claim rose nearly six percent a year over that 50-year period, far higher than the overall U.S. inflation rate, according to the Triple-I's research. 

“The cost of auto insurance has increased during this timeframe because the cost to settle a claim has risen far faster than inflation,” the Triple-I concluded.

Video: Ensuring Policies Are Priced Fairly & Accurately 

The Triple-I has a full library of educational videos on its YouTube Channel. Information about Triple-I mobile apps can be found here.

Back to top