With the economic crunch still keeping a tight hold over Americans’ wallets, insurance rates in the state of Georgia continue to increase significantly.
As the effect of the financial crisis on Wall Street trickles down into the different insurance industries, companies are raising their rates this year in Georgia and in other states. And if previous insurance trends take hold, then insurance policies can cost even more once the economy starts to make a recovery.
While home insurance costs rose anywhere from 5% to 11% this year according to the Georgia Department of Insurance, hikes in car insurance rates have been mild so far. Rate changes filed by some two dozen companies have averaged only 2.4 percent.
Even so, Georgia Insurance Commissioner John Oxendine said that Georgians are better off than consumers in neighboring states. Oxendine explained that in most states in the Southeast, premiums have been rising at double-digit rates. “We are by far the cheapest in the Southeast”, he added.
Recent media reports indicate that insurers have raised premium rates in some states like Illinois, Florida, and Texas. Insurance firms are regulated at the state level.
Several industry experts also believe that with the uncertain economic climate, the general direction of insurance premiums is still largely unknown and difficult to predict.
Michael Murray, assistant vice president of financial analysis at New Jersey-based Insurance Services Office, says that “The situation at the moment is a little bit complicated because supply and demand are both moving.” His company deals with industry statistics and keeps tabs on the changing insurance landscape.
He also added that while the slump in insurance costs in the past year seemed to be dawdling, “it’s hardly started to turn up yet.”
Presently, Georgians pay more than the national average for car insurance according National Association of Insurance Commissioners. The national average stands at $937 while the figures in Georgia stands at $965.
Increasingly expensive auto repairs are believed to be the primary cause of this year’s insurance premium rate hikes, and not the changes to state regulation regarding car premiums.
The Federal Bureau of Labor Statistics, however, argued that insurance rates rose dramatically after previous recessions. In 1976, car insurance rose 29 percent. Insurance premium rates also spiked to double-digit figures in 1985 and 1986. In recent times, the rate also hiked 8.8 percent after the 2001 recession.
Insurance specialists are hopeful, though, that a repeat of the sudden hikes will not necessarily make its presence felt at the end of this recession.