Vehicle owners in Dallas area saw their insurance rates rise by 10 percent in a year, causing consumer groups to raise alarms. Insurers say that much of the increase is boosted by the rise in liability cost, which makes up half of a premium rate. But consumer groups say that poor return in the industry is the real reason behind it.
North and South Dallas, Duncanville, Garland, Irving, and Richardson are all affected by insurance cost hike. Last year’s monthly premium rate was at $556. This was for 25- to 65-year old male drivers who drive their car from home to work. Now it has jumped to $574. This is rate for policy holders who have no traffic infractions and have an average credit score. Premiums are expected to be significantly higher for those who have multiple traffic violations and credit scores which are below average.
It is impossible to come up with a fixed average though because of huge disparities within the six zip areas. In Irving, a company offers coverage as high as $1100 while another provider offers their services at around $200.
Consumer advocates say that raising fees too quickly is excessive and lacks justification. They point out low profit returns of insurance investments in the stock market main reason behind this year’s price hike. They criticized the double digit increase in one year as too onerous for consumers, especially in tough economic times.
However, industry representatives say that increase in premium rates is inevitable since it is propelled by high medical costs. They attribute the skyrocketing costs to huge increase in hospital charges and physician fees during the recent years. They add that such increase in Texas is not excessive since the Dallas auto insurance premiums in the state are not far from the national average. Representatives also pointed out that their rates still remain low compared to the rest of the United States because of the high competition level among carriers in Texas.
The Office of Public Insurance Counsel (OPIC) believes that lack of investment profits drives the price hike more than any other factor. Texas Public Insurance Counsel says that returns in investments is not what it used to be so companies try to make up for lost profits through underwriting costs. OPIC is still requesting insurance companies to provide them with more information that will justify the price hike. State regulators warn that they will challenge insurance providers who cannot make justifications.