Car insurance premiums skyrocket

While insurance companies only cover half of crash costs

Insurance rates, a tale of two stories – part 2

It’s bad enough that insurance companies are crushing storm-ravaged Iowa homeowners with skyrocketing home insurance premiums, as we reported earlier. According to recent data from the Consumer Price Index, car insurance rates are also up nearly 21% across the country, meaning many Iowans face double-digit policy increases. 

Insurance company executives offer several excuses for slamming Americans with these steep rate hikes. They are losing too much money, they say, because of inflation and the rising cost of car repairs. They point to the troubling increase in severe car accidents. They even attempt to blame their own policyholders, who sometimes have no choice but to take them to court when they refuse to pay insurance claims.

But here’s what they aren’t telling you: the whole truth. The industry IS NOT losing money. In fact, they’re raking it in. 

  • Property and casualty insurers raked in historic profits in 2023 – $88 billion, according to the National Association of Insurance Commissioners—the industry's most profitable year ever. According to AM Best, this year looks even better, with first-quarter profitability on pace to shatter 2023’s record high. As consumers pay soaring premiums, Wall Street is also rewarding the insurance giants with record share prices.
  • Auto insurance companies pay only 54% of the $340 billion in economic costs associated with motor vehicle crashes each year, based on data from the National Highway Traffic Safety Administration. Crash victims bear 23% of the costs, with charities, health care providers, and local governments (taxpayers) picking up the rest.

It’s a double whammy for us policyholders who pay much more premiums but get less coverage after a crash. In fact, denying claims and lowballing accident victims has become standard operating procedure for many auto insurers.

Would you like more evidence that insurance bigwigs are talking from both sides of their mouths on this issue? During an industry annual conference earlier this year, Evan Greenberg, the CEO of Chubb Insurance, told his colleagues that the time was right for a prolonged “tort reform” campaign, which is code for attacking our constitutional right to hold insurance companies and massive corporations accountable in a court of law. “It’s going to take money. It’s going to take talent. It’s going to have to be approached like a long-term political campaign,” Greenberg said.

Businesses need to make a profit in order to thrive, and it goes without saying that Americans rely on insurance to protect our health and financial well-being. However, Iowans are not stupid. We know a smokescreen when we see it.

 
 

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