Auto insurance is one of life’s necessary evils. While you may dread your monthly payment,
when you need it, you’ll be thankful you have it. Speaking of payments, you may be wondering
why your rates are going up. Keep reading to find out.
Business Is Business
Regardless of the industry, revenue must surpass expenses for a business to survive.
Unfortunately, what profit insurance companies bring in through customer premiums is often
overwhelmed by payouts and logistical expenses. This expense to revenue proportion is known
as combined loss ratio and for all but two major auto insurance companies in the United States,
this number is above 100%, according to SNL Financial. This results in increased rates for all
customers, regardless of their record.
Weather, Wrecks, And What-Ifs
Auto insurance is complicated, especially when you consider the countless policies coming to
fruition each year. That being said, there are several factors that can cause policy rates to
increase, including weather and wrecks.
According to insurance giant Progressive in 2016, catastrophic losses at the end of the third
quarter were “$121.0 million greater than in the same period [of 2015]”. This is largely due to
Hurricane Matthew, however looking at the average cost of a catastrophe claim, any extreme
weather can cause major expenses for both insurance companies and their customers.
In addition to inclement weather, drivers are having more accidents. Commonly due to texting
while driving, 2016 held 40,200 fatalities, the most since 2007, according to the National Safety
Council. Diving even further into this number, “Teens [are] the largest age group reported as
distracted at the time of fatal crashes,” according to NHSTA.
Regardless if caused by weather patterns or generations dealing with the consequences of
technology, insurance companies are being forced to raise premiums to pay losses. Will this trend
change or will the increasing number of drivers only further the problem? We’ll have to wait and
However, discouraging this may be, there is nothing more valuable than your life. Allow Adkins
Insurance to work with you to make sure you are getting a fair and accurate price. Give Adkins
Insurance a call at (417) 883-4343 and we’d be happy to answer any questions you may have.