Survey reveals auto insurance cost set to increase


The premiums of the auto insurance policies in the United States are on the rise again for the third year in a row. The need for this price hike has been driven by the rising cost to recover from natural disasters and also poor interest rates. In order to make up for the loss in revenue, auto insurance providers are left with no choice but to increase the cost of their offerings.

According to statement published on the website of the Insurance Information Institute on Tuesday, the average increase in the auto insurance premiums will be 2.8 percent. The auto insurance policy which cost $816 in the year 2011 will increase to $839 when the rise takes effect.

An analyst with CitiGroup Inc, Keith Walsh said that the low interest rates on the bonds has had a very ‘restricting’ effect on the auto insurance companies because of which they are making up for their lost revenue from the auto insurance premiums. After the publication of the results of one of the surveys conducted by the Consumer Federation of America which revealed that the drivers in the country do not approve of auto insurance providers using the occupation and education level while calculating the premiums, the Insurance Information Institute has said that, despite the increase, the average cost of the auto insurance policies will be less than $842 which was the average cost in the year 2004.

An industry group statement, the rating factors approved by the regulators and supported by the actuaries are ideal for measuring the risk factors involved while issuing auto insurance policies to customers. While risky drivers have to bear the brunt of high premiums, the safe drivers are eligible for various discounts. The increasing number of voluntary programs as well as the ‘pay as you drive’ programs that monitor the miles being driven allow customers to save more on their auto insurance premiums.

Traveler Cos and Allstate Corp are two of the many property and casualty insurance policy providers that are seeking an increase in the cost of the policies. The consumer group, advocating the poor, said that the pricing policies approved by the state regulators are taxing on those in the lower income group.