Motorists and policyholders in the Dallas-Fort Worth area of Texas have seen insurance premiums climb steadily over the past few months. Insurance analysts say that while premiums have been on the rise in Texas, rates in the Dallas area have gone up particularly faster.
Industry representatives and consumer advocate groups have fought over the real reasons for the increase, with insurers claiming that rising medical costs are to blame. Consumer rights representatives, on the other hand, argue that providers are jacking up premiums because they are unable to recoup from massive losses in the stock market and other investments. Insurance companies denied the allegations and insisted that rising medical costs are forcing them to raise premiums.
The recent findings were compiled using data provided by the top 25 insurance firms operating in the state of Texas. Researchers were able to discover that in the immediate area surrounding the sprawling urban metropolis of Dallas-Fort Worth, auto insurance premiums have risen by double digits in the past year alone. The study also suggested that the sudden increase was due to more expensive liability coverage.
Consumer advocates are calling the rate hikes as excessive and unwarranted, and are calling for insurers to slash rates to more tolerable amounts. They warn that if the relatively expensive insurance premiums remain, Texans may be unable to pay for them. The current economic situation makes it almost impossible for motorists to comply with mandatory insurance especially if providers continue raising premiums, they add.
Representatives from the different insurance companies explain that they have to react to rising medical expenses, especially for injured policyholders. They point out that doctors’ fees and hospital charges make up for the bulk of costly premiums. Analysts also warn that insurance rates in the state of Texas are creeping slowly higher along with the national insurance average, thanks to a decline in the demand for car insurance.
However, the poor outlook on the insurance industry can mean tougher completion among insurers. Experts say that this can eventually lead to lower premiums as completion heats up.
Some analysts also contend that the increase in auto insurance rates may be due to the poor returns of on company investments. This year’s performance of the stock market leaves a lot to be desired, possibly making it harder for insurers to get significant returns on their investments. The current standing of the stock market and other investment markets may be forcing providers to raise premiums just to stay afloat.