According to a study, auto insurance rates will rise again in 2024.

Car insurance costs will continue to increase in 2024: study

 According to a recent study, auto insurance rates are expected to rise an additional 20% in 2023, causing further hardship in the New Year.

Due to an increase in serious accidents and over two years of high inflation, insurers are facing larger losses, thus they have raised premiums to make up for historically weak underwriting performance. According to the Jerry report, there is little evidence that the increases are being implemented as auto insurers continue to request regulatory approval for more rate increases.

According to the survey, the cost of motor insurance has increased by 35% since April 2021 and by 19.2% annually in October, which is the highest increase since at least 1985. More than half of Americans stated that they have had to make other spending cuts as a result of high rates, and seventy-five percent stated that the country's rapidly increasing costs make auto insurance unaffordable. 

Henry Hoenig, a Jerry data journalist and report author, stated that "there is no sign that insurers are done with steep rate increases as they seek to catch up to the soaring costs they've faced in recent years." "That spells more pain for American drivers."

Ensuring that you are paying for the insurance you require is one method to take charge of your automobile ownership expenses. Comparing quotes for a new car insurance policy may help you save money. Without influencing your credit score, the Credible marketplace may assist you in comparing several providers and locating your customized rate in a matter of minutes.

Having a car costs money. 

The cost of owning a car is currently in crisis, and one aspect of it is skyrocketing auto insurance rates. Both the cost of financing a vehicle and its price have increased in tandem with interest rates. 

In an effort to slow the economy and rein in skyrocketing inflation, the Federal Reserve has raised interest rates eleven times since March of last year, bringing the federal funds rate to a 22-year high of 5.25% to 5.5%. Thus, the yearly percentage rates for financing a new car grew to 7.4% from the second quarter, while rates for financing a used car went up to 11.2%.

Those higher financing costs mean that roughly 17.5% of conusmers who have financed a new vehicle pay more than $1,000 a month on their car note in the third quarter of 2023, up from 17.1% the previous quarter, according to a recent Edmunds survey. 

Beyond car insurance and financing expenses, the cost to maintain and repair vehicles has also risen sharply in recent years. Vehicle repair costs have increased by roughly 33% since March 2020, partly because it's more expensive to repair cars with more advanced technology today. 

"The prices of vehicles, maintenance and repair services, and vehicle parts have all risen sharply in recent years," said Hoenig. "But none have risen faster than insurance."

Shopping for auto insurance is one way to lower your spending on car ownership. Visit the Credible marketplace to compare multiple providers and find your personalized rate in minutes without affecting your credit score.

AI could pave the road for premium discounts

Younger insurance customers are increasingly embracing AI solutions in the insurance space, according to a Policygenius report. Fifty-four percent of consumers aged 18 to 34 said they would trust AI to accurately process applications, answer questions or handle claims without human involvement if it meant a faster process – roughly three times more than customers aged 55 or older.

Insurers are increasingly leveraging AI solutions for automating basic administrative tasks, quantifying and pricing an applicant's risk by analyzing hundreds of thousands of data points and in the claims process. Moreover, the report said that using AI in underwriting and policy pricing, customer service and claims could improve productivity and reduce operational expenses by up to 40%, savings that insurers could potentially pass on to the consumer.

"But there is also a fair amount of risk that comes with the increased use of AI in the insurance sector, namely if it will act ethically and avoid bias and discrimination when left to make decisions around applications or claims," the paper stated. 

You might think about switching vehicle insurance companies to get a cheaper rate if you are having trouble paying for auto repairs and would like to save some cash. Visit Credible to compare prices from several auto insurance companies at once and select the most affordable one for you. 

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