Auto insurance: 2016 in review and what new to expect in 2017

​As we were all warned , 2016 has turned out to be a tough year for many auto insurance companies. While the final statistics for 2016 haven't been tabulated, we knew it was coming since the first quarter of 2016, when many companies reported severe losses from big catastrophes. Winter storms and other storms particularly had a lot to do with that.


     But the major factor that caused this money crunch was the increase in the average dollar cost per claim. This is due to primarily two things:

• The increase in healthcare costs for those who were injured in accidents. Nothing much can be done about that. Healthcare costs move in time only one direction: UP!
• The higher repair costs on vehicles that are increasingly increasingly having more expensive technology installed into them. for example: it used to be that a damaged bumper would cost several hundred dollars to fix. ....Today, with all these sensors and safety features added, those same bumpers can cost thousands of dollars to repair today.
• Increased competition which drove down cost of insurance premiums. Some companies, trying to attract new business, set the price too low to the profitable.
• The frequency and number of auto insurance claims went up. This number fluctuates up and down over the years. But 2016 was definitely an UP year!

Combine all of that and you have a very tough year for the auto insurance industry.


No Fear! 2016 Was NOT completely all Doom and Gloom!


        There's also some good news to report in 2016. Although many auto insurance companies either lost money or barely squeaked by, there are other auto insurance companies that did quite well in 2016. In fact, some companies did well enough to report that no increases in premium are planned anytime in the near future.

2017: How the auto insurance companies will adjust for the bad year, and what to expect next.


     Of course, some companies lost money to the point to where they have no other choice but to raise rates. Again, some of it's due to higher health costs and some of it is due to higher repair costs. Repair repair costs seem to be the fastest growing problem.


But even between some of those companies who struggled in 2016, not all of them will be raising premiums in 2017. Some of them are making other adjustments so that they don't have to increase rates. While some of these adjustments might get annoying and require the insured to jump through some extra hoops, I'm sure that you will all agree that's better than paying a higher premium.


Some of these adjustments include:


Stricter underwriting


Proof of garaging address.  As most of you know, with all other things being equal, people who live in smaller towns pay less for auto insurance than people living in big cities. Insurance companies have noticed a spike in claims in which the insured was found to be living at a different address then what was listed on the policy. The difference between one town to the next can make a big impact on your premium. And companies are getting wise to the fact that more drivers are trying to cheat the system. As a result, more insured are being asked to provide documentation to show that they live where they say they're living. I've had several of my own customers get flagged for this. For those of you who are being honest about where they live, this really isn't a big deal. Just an extra hoop you'll need to jump through.


Household drivers.


    Again this is another area in which more claims are happening from drivers not listed on the auto insurance policy that should be. This can be very common with teenagers and drivers with bad driving records. Companies are getting more proactive proactive at finding the problems before there is a claim. All people living in your household of driving age should be listed on your auto insurance policy. I have also had customers flagged for this, but it hasn't been a big problem.  Just another hoop to jump through.


Pay plan adjustments.

• Higher up front down payments.  Companies can adjust pay plans to where they're not raising your overall total rate. Paying a higher down payment will cost you more up front to start or renew a policy, but you'll even out by the end of the policy with the lower installment payments.
• Less number of payments.  Instead of making payments every month, many companies arrange payment plans to have a lower number of payments. For example: People with a six month policy might only have five total payments; people with a yearly policy may have only 9, 10 or 11 payments.

Steps you can take to keep your auto insurance rates low:


Shop Around! 


This concept is very simple: The more auto insurance companies that you get quotes with, the more likely you are of finding your lowest possible rate.
Insurance experts recommend that you should shop around for lower auto insurance rates at least every two years. Statistics show that most fall well short of that recommendation.
Those who stay with the same auto insurance company for years tend to find the highest amount of savings when they finally do shop around.


Take advantage of any available discounts


Many people don't take advantage off all the discounts they're eligible for. Companies vary in what discounts they offer. But if you don't look into what discounts you're eligible for, it's like leaving money on the table.


More to come in 2017: Driver behavior discounts

• Driver behavior devices - These devices plug into your vehicle's diagnostic port and record your driving habits. I'm sure you already have heard of Progressive's Snapshot. Other companies either already have or are about to come up with similar devices. While these devices are slow to catch on with many people, others are earning significant discounts.
• Cell phone / Text Disablers - These devices/apps prevent you from texting (and some disable the phone completely) while the phone is in motion. Examples include the Textbuster and LifeSaver....  Installing these on your vehicle/phone will earn you a discount. Only a few companies are just now adding this to their list of discounts. But this is something you will see more and more of coming in 2017, as other companies follow suit.

SUMMARY:
Don't be afraid to shop around with other companies. You may be amazed at how much this could save you. Especially if you haven't shopped around in a long time.
Inquire about and take advantage of any available discounts a company offers. Many discounts are available that are easy to apply to your policy.
Keep an open mind about new technologies coming out. These can be big money savers in the future.




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