The Impact of Labor Crunch and Supply Chain Disruptions on Auto Insurance Rates

Return to Pre-Pandemic Driving Levels and Higher Accident Rates

In a recent interview with CNBC, Dr. Michel Léonard, Triple-I vice president and senior economist, explained how the return to pre-pandemic driving levels is resulting in higher auto accident rates.

Higher Repair Costs and Delays Due to Supply Chain Disruptions

More accidents mean a larger volume of more expensive claims for insurers to pay because of higher repair costs, delays in repair time due to chip shortages, supply chain disruptions and a labor crunch.

Auto Insurance Market Still Soft Despite Recent Rate Increases

Elyse Greenspan, a managing director at Wells Fargo, said the year-over-year increase resulted from the premium base in May 2020, reflecting pandemic-related refunds. Triple-I analysis shows that due to the sharp declines in the number of miles driven, U.S. auto insurers returned $14 billion to their customers last year. Greenspan describes the current auto insurance market as still soft even after recent rate increases. Not all insurers are raising rates, she added. “It’s still a good environment for consumers who are purchasing auto insurance.”

In conclusion, while auto insurance rates are increasing due to higher accident rates and repair costs, the market remains competitive. Consumers should shop around and compare rates to ensure they are getting the best deal. Additionally, maintaining a safe driving record can help keep premiums low.