Across the industry, personal lines auto insurers are increasing their premiums.  Consumers are feeling the pain of these increased premiums, even if they have a claims free history.  Why?

Both Safeco and Travelers provided the following reasons:

  1. In 2015, the U.S. set a new car sales record of nearly 17.5 million vehicles in 2015 and these newer vehicles with their advanced technology are more expensive to repair. 1
  2. There was a 3.5% increase in total miles driven in 2015 resulting in a larger number of car accidents.
  3. 2015 brought the largest single-year increase in driving related deaths since 1966. Per Travelers, we are on track for a two year increase of 18%. 3
  4. Because of medical inflation and increasing claim complexity, injury costs are rising by 5 to 6 percent. 4
  5. Distracted driving is increasing. According to the National Highway Traffic and Safety Administration, fewer people are talking while driving, but more are texting and surfing the web. 5
  6. The average 10-Year U.S. Treasury Bond has yielded 2.6% since 2008, but is now a paltry 1.7% as of May 2016. Insurance companies reinvest their profits in bond markets so they are realizing less in this investment as well. 6
1 Strategy &, Price WaterHouse Coopers, 2016 Auto Industry Trends;  2 U.S. Department of Transportation’s Federal Highway Administration; 3 National Safety Council, Insurance Information Institute; 4  National Highway Traffic Safety Administration; 5  National Highway Traffic Safety Administration; 6 SNL Financial

What does this mean to the Personal Lines Producer? 

Opportunity!  Your current clients as well as your prospects need an agent’s expertise to find solutions to this current trend.

Do not give your current clients the opportunity to go elsewhere for their quotes when they receive that renewal with the big increase!  Be Proactive!

For your current clients, now is a great time to schedule a review of their coverages before they renew.  Offer solutions to lower costs either now or in the future.

  1. If a vehicle is old and paid for, consider eliminating your collision coverage.
  2. Is your client taking advantage of any multi-line discounts by keeping all of their personal lines coverage with one carrier?
  3. Review your client’s deductible to see if this could be raised. Help your client find a balance between premium cost savings from increasing the deductible and what risk is affordable with a higher deductible amount.
  4. Advise your clients to drive carefully. Safe drivers are rewarded with a better insurance premium.  Trying to control these rising premiums might motivate drivers to be more careful.
  5. If your client has a teen driver now or in the immediate future, educate them on what that teen can do to earn discounts. Covering a teen driver is very expensive.  There are good student discounts and possible additional discounts for a safe driving course.  Some carriers offer teen driving programs.
  6. Consumers can improve their credit score. Many insurance companies now use credit scores in factoring the cost of premium.
  7. Before buying that new car, check out the insurance cost for prospective cars. Premiums can vary greatly between different cars, models, years and options.
  8. When purchasing that new car, select cars with added safety features like air bags, anti-lock brakes, electronic stability control, etc. These cars are rewarded with discounts.
  9. Purchasing a Hybrid car may offer additional discounts from carriers.
  10. If your client is considering moving to a different location, let them know to check their rates for that new location.
  11. Drive less. Carpool, take public transportation when available, organize those weekend errands to be more efficient, take your bike to the local library, etc.  Driving less lowers the risk of accidents and some drivers can then receive a low mileage discount.
  12. When available, Accident Forgiveness is an option that can help avoid a rate increase following the first at-fault accident on a policy.

Use this opportunity to solidify your value and expertise with your current clients as you assist them with evaluating their coverages and finding solutions to keep their insurance costs in check.  Educating your clients on what drives the cost of their auto insurance gives them the power to make positive changes.  Over time, these changes could mean serious savings for your clients.  Even if there is no easy solution, you have assured your client that you are on top of things and they should continue using you as their agent.

When you successfully assist your clients, ask, “Who do they know that needs your help with an increased auto premium?”     

Discounts mentioned may not be available from all carriers and in all states.