Insurance Inflation Index: Car insurance rates rise

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Auto insurance prices rose 0.6% in April, according to the May 13 U.S. Bureau of Labor Statistics’ Consumer Price Index. Last month, the BLS reported that car insurance rates had declined 0.8% from the month before. 

While rates were up last month, year-over-year auto insurance prices continued their downward trend. Rates for the last 12 months were up 6.4%. While that’s still higher than the overall rate of inflation,  it’s down from 7.5% in March, 11.1% in February and 11.8% in January, according to the BLS. 

The recent easing is welcome news to consumers, who, in the last two years, have seen auto insurance prices jump more than 30%%, according to BLS’s tracking of urban consumers’ spending.

The Insurance Information Institute (Triple-I), an industry trade group, has been forecasting a countrywide average personal auto rate increase of 7% in 2025.

“The CPI report is in line with what Triple-I had forecast for 2025. Average rate decreases are moderating because premium increases over the past two years are catching up with insurer loss costs,” said Mark Friedlander, senior director, media relations.

“Further, several major national insurers have been filing for rate decreases, particularly State Farm, Progressive and Geico in Florida,” Friedlander said. “These reductions are due to an 80% year-over-year decline in auto glass claim lawsuits following tort reform passed by the Florida Legislature in 2023.”

While other experts also expect rates to continue dropping, it might not be a straight line down.

“Uncertainties continue to characterize the path forward. Despite a slight increase on a monthly basis, the annual trend paints a picture of a steady decline from previous record highs,” said Scott Shapiro, U.S. insurance sector leader at KPMG, the audit, tax and advisory firm.  “Looking ahead to the summer months, insurance companies continue to grapple with the challenge of figuring out how to assess future costs amid continued economic volatility and tariff policy developments.”

Consumers looking for cheaper rates

Still, consumers — stirred by rising premiums over the last couple of years — are increasingly looking for cheaper rates, according to LexisNexis Risk Solutions. The data and analytics company said on Feb. 18  that as of Dec. 31, 2024, almost half (45%) of all policyholders shopped at least once in the last 12 months for a new policy.

As consumers seek out cheaper insurance, it’s important to note that individual rates depend on many factors, including a person’s age, driving history, the car they drive, their coverage levels and where they live. For instance, average car insurance prices can range from $1,175 a year in Maine to $2,883 a year in Louisiana, according to the most recent analysis by Insure.com.

In other insurance segments:

• Health insurance prices rose 0.4% in April. This followed a similar 0.4% month-over-month increase in March. Prices were up 0.3% in February and 0.7% in January. 
• Prices for tenants’ and household insurance — which most people call renters insurance — were up 0.3% in April, which follows a decrease of 0.3% in March. Prices had been easing the last few months. Rates increased 0.8% from January to February and were up 1.1% month-over-month from December to January.

The BLS doesn’t track homeowners and life insurance. 

For March, the overall Consumer Price Index, a measure of the cost of U.S. goods and services, was up 0.2%. This followed a decrease of 0.1% in March.

The index is up 2.3% for the last 12 months, the lowest increase seen since February 2021.

John McCormick

 

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John McCormick is an insurance expert and the editorial director for QuinStreet's insurance sites -- CarInsurance.com, Insurance.com and Insure.com. Before joining QuinStreet, he was a deputy editor at The Wall Street Journal and was an editor and reporter at several media outlets where he covered insurance, personal finance and technology.