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inflation for the same period. Last year, the seven largest insurers in the state upped their rates by an average of more than 12 percent — by far the highest one-year hike since at least 2015 — based on a Boston Globe analysis of hundreds of filings with the state Division of Insur-
ance.
Among the rate increases ap-
proved by DOI last year was an eye-popping nearly 26 percent for GEICO, the second-biggest insurer in Massachusetts with 16 percent of the market.
So far this year, the seven largest insurers, which together control almost 75 percent of the market in Massachusetts, have received state approval for rate increases averaging almost 5 per- cent.
Drivers have some power to control what they pay, either by searching the market for a better rate or reducing their coverage. Here are some things to know about how to navigate the world of insurance.
Are insurers lining their pockets while we pay more?
You might wonder whether insurers are reaping huge profits while their rates climb higher. In fact, Massachusetts auto insurers did well during the pandemic, earning profits on underwriting of 14.4 percent in 2020 and 9.6 percent in 2021. But now, many are doing worse than when rates were going down.
After rolling back rates by almost 1 percent in 2021, the industry’s streak of four con- secutive profitable years ended
in 2022, with a 4.7 percent loss. That prompted insurers to begin significantly jacking up their rates — a trend that continues today.
No state-level profit figures are available yet for 2023, but on the national level, auto insurers in 2023 lost about 5 percent, which was not as bad as the 12 percent loss they suffered a year earlier, according to data compiled by LexisNexis Risk Solutions.
The losses were not felt uni- formly in the industry. GEICO, for example, reported $5.3 billion in profits in 2023, after taking a loss in the previous year. That may explain in part why GEICO, after raising its rates by almost 26 percent in 2023, has not re- quested a rate change in Massa- chusetts so far in 2024.
So what are the factors behind the increases?
More — and more expen- sive — claims are driving a rapid increase in the cost of auto in- surance nationally and in Mas- sachusetts. Claims are more expensive because the things insurers pay for, such as auto re- pair and replacement and medi- cal care for those injured in car crashes, have grown more ex- pensive, according to insurance analysts.
Cars and trucks today are in- creasingly complex, packed with computer chips that do every- thing from analyzing sensor data to managing emissions. Chris- topher Stark, executive director of the Massachusetts Insurance Federation, an industry lobby, gave the example of a Honda Civic bumper, which he said is
now made up of 26 components, compared to 11 in 1990.
Are rates going up because we’re bad drivers?
There are some signs that people are being less careful. Distracted driving violations — mostly related to mobile phone use — were up by 24 percent in 2023 among younger drivers, ac- cording to LexisNexis Risk Solu- tions.
In Massachusetts, traffic fatal- ities increased by almost 25 per- cent in the 10-year period ending in 2022, but took a 20 percent downward turn in 2023, com- pared to the previous year, ac- cording to the National Highway Traffic Safety Administration.
Any other factors contributing to cost increases?
Climate change is clearly driv- ing up premiums on homeown- ers insurance, but it’s also a factor in auto insurance, which covers claims for cars and trucks dam- aged by storms, including flood- ing and hail. In Massachusetts, coverage for weather damage, known as comprehensive insur- ance, is optional, which is more expensive.
Auto theft, which also impacts insurance rates, was up by 16 percent in 2022 compared to the previous year in Massachusetts, according to the National Insur- ance Crime Bureau, a nonprofit
organization.
Your Insurance Guy
By Jim KiNg NeWfouND iNsuraNce
If you have recently received a renewal notice for your auto insurance policy, it is likely your jaw dropped and maybe even hit the floor. You have had no claims or issues, yet your premium has increased by 10% or more since last year.
There is no question auto in- surance rates have skyrocketed over the last few years. It has got to the point where in the Boston Globe on Monday October 21, 2024 it was a leading front page article.
The article was written by Sean Murphy and contains some explanation as to why insurance rates have sky rocketed and what you as the consumer can do about it. While the article is writ- ten about insurance rates in Mas- sachusetts, many of the points Sean mentions apply to everyone. Below are some relevant excerpts.
In Massachusetts, auto insurance rates are soaring. Here’s what you can do about it.
By seaN P. murPhy gloBe staff
The cost of auto insurance in Massachusetts has soared by al- most 38 percent since the begin- ning of 2022, climbing at a pace that is more than double the al- ready elevated rate of consumer
How can consumers lower their insurance rates?
Shopping around is crucial. Competition can be a good thing for consumers because it drives down costs. But in order to har- ness the power of competition, you must get multiple quotes, rather than simply renew your policy with the same insurer year after year.
Anything else drivers can do to lower costs?
You can decrease what you pay for insurance by increasing your personal risk of loss. There are changes you can make that means you’ll pay more — and your insurer will pay less — if your car is damaged.
For instance, you can raise your deductible, which is the amount you pay out of pocket before your insurer begins pay- ing (deductible amounts usually range between $500 and $2,000).
Please feel free to call us with any questions or concerns about your insurance coverages. We are happy to help. We are here to answer any questions. You can reach us at 603-744-5000 (yes, we do answer the phone) or email us at info@newfoundins.
comAlternatively, please visit our website www.newfoundins.com
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