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The latest data from the Bureau of Labor Statistics shows car insurance prices eased slightly from April to May, the first month-over-month decline in more than a year.

Auto insurance prices were down 0.1% in May, after rising 1.8% in April and 2.6% in March, according to BLS’s Consumer Price Index (CPI) for May.

However, consumers are more likely to notice the year-over-year increase in car insurance rates. Over the past 12 months, auto insurance prices are up 20.3%.

While car insurance prices were down, two other industry sectors, tenants’ and household insurance and health insurance were up in May.

Tenants’ and household insurance, which most people call renters insurance,  increased 0.5%. This followed a 0.1% drop in prices in April and a 0.5% rise in March.  The BLS does not track homeowners insurance nor life insurance.

Health insurance prices, which have been rising since the end of last year, were up 0.5% in May, 0.3% in April and 1.2% in March.

For May, the overall CPI, a measure of the cost of U.S. goods and services, was flat from April and up 3.3% from last year.

The Insurance inflation index

MonthMotor vehicleTenants’ and householdHealth
May-0.10.50.5
Apr1.8-0.10.3
Mar2.60.51.2
Feb0.9-0.10.4
Jan1.40.71.4

Auto insurance rates still up for the year

The dip in auto insurance prices is welcome news, says Dr. Michel Léonard, Chief Economist and Data Scientist at the Insurance Information Institute, an industry trade group.  

But, he cautions, it’s just one month’s data.

The insurance industry since the pandemic has been dealing with underwriting losses due to labor shortages, supply chain issues, inflation and other factors. People’s driving habits also deteriorated during and after the health crisis, he says.

The latest BLS data is a reflection of lower inflation this year than last, people’s improved driving habits, and the rate increases many insurers have already passed on to drivers —  the largest private auto insurers have raised their premiums by double digits in the last year – eliminating the need for steep increases in 2024.

Still, Léonard says, auto insurance companies’ loss ratios – what they collect in premiums against what they pay out in claims and expenses – are not where the companies feel they need to be. Many have been losing money for years and it takes time – given the fact that each state needs to approve a rate increase – to raise premiums.

Triple-I expects to see rate increases through next year.

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John McCormick

 
  

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.