After a 20.3% increase in December, economists blame surging auto insurance prices for higher than predicted inflation rates and see no relief coming for drivers
https://www.carscoops.com/author/chris-chilton-cc/
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by Chris Chilton
3 hours ago
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If you’ve recently tried to renew your car insurance and had a nasty shock, you’re not alone. U.S government data shows that premiums in December just gone were a massive 20.3 percent higher than those during the same period in 2022. That’s the biggest increase since the mid-1970s.
The December numbers stand out, but premiums were rising all through the year, climbing 1.5 percent between November and December. Industry experts put the spike down to a combination of factors including the increased cost of new vehicles, and rises in the cost of labor and parts that negatively impacts repair bills. Average annual rates for full cover during 2023 stood at $2,019, CBS News reports, that figure up from $1,633 during 2022.
This is obviously bad news for America’s drivers, but it’s also bad news for the nation’s lawmakers, too. The rise in premiums is preventing efforts to bring down inflation, Reuters says. While rises in insurance costs aren’t normally a major factor in overall U.S. inflation, the latest jump is so great that it accounted for 15 percent of price increases recorded during the last quarter of 2023.
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What that means is that consumer prices in December rose by 3.4 percent versus the same time a year earlier, and compare badly with the 3.1 percent rate predicted by economists polled by Reuters, and the verified 3.2 percent rise recorded in November.
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National Economic Council Director Lael Brainard told reporters that there was a “call to big business to bring down those prices that they increased so much when supply chains were snarled,” adding that the government had “a real focus on tackling unfair and deceptive price practices.”
But he admitted that while the government had some sway, much of the control rests in the hands of independent agencies. Costs can vary wildly across the country and insurance is regulated via individual states.
Tom Simons, a U.S. economist at Jefferies contacted by Reuters, described the premium rises as “remarkable” and said he didn’t predict any respite for drivers from big insurance bills in the near future.
