Insurance Inflation Index: Car insurance rates increase again in September

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Auto insurance prices rose 1.2% from August to September, according to U.S. Bureau of Labor Statistics data released October 10, which followed a 0.6% jump from July to August.

Auto insurance costs have risen every month this year except May, when prices were down 0.1% month over month, according to the BLS’s Consumer Price Index (CPI).

Car owners have been dealing with increasing auto insurance premiums since the end of the Covid-19 pandemic. In the last two years, auto insurance costs have jumped around 40%, according to BLS’s tracking of urban consumers’ spending.

However, there might be light at the end of the tunnel.

Year-over-year increases in car insurance rates have started to slow. 

The September numbers show motor vehicle insurance up 16.3% over the last year, continuing a months’ long trend.  August’s inflation numbers had motor vehicle insurance up 16.5% year-over-year,  July’s number were up 18.6% year-over-year, June was up 19.5% year-over-year and May was up 20.3% year-over-year.

It’s also important to note that, while rates are high, average car insurance prices vary greatly from state to state, from $2,883 a year in Louisiana to $1,175 in Maine, according to the most recent analysis by Insure.com.

Prices for tenants’ and household insurance — which most people call renters insurance —  dropped 0.5% last month, continuing an up-and-down pattern.  Tenants’ and household insurance was up 0.8% in last month’s report, flat the month before, down 0.7% in June’s report and up 0.5% in May’s report. 

Health insurance prices rose by 0.41% in September, which followed a 0.1% increase in August.

The BLS doesn’t track homeowners and life insurance. 

For September, the overall CPI, a measure of the cost of U.S. goods and services, rose 0.2% — that same increase as in August and July — after dropping 0.1% in June. The index was up 2.4% for the last 12 months.

Long-term auto insurance inflation trends

Insurance prices rose with the increase in the frequency and severity of accidents as the Covid-19 pandemic waned.  But auto insurance inflation, while still high, is showing signs of softening, according to Scott Shapiro, the insurance sector leader at KPMG,  the audit, tax and advisory firm.

“In general, physical damage repair costs have abated since the spikes caused by supply disruption and inflation,” he says. The most pronounced softening, he says, is in the physical damage area and claim costs associated with lower repair parts and costs.

However,  prices are still rising and, for any given policy, lower repair costs can be offset by other factors, such as rising litigation costs, he says.

John McCormick

 

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John was a deputy editor at The Wall Street Journal and had been an editor and reporter at a number of other media outlets where he covered insurance, personal finance, and technology.