The four largest U.S. auto insurers continue to raise rates sharply across the country as they attempt to offset increasing loss trends.
Among the Big Four, The Progressive Corp.'s first-half rate hikes were the most impactful, as they are expected to boost the insurer's personal auto premiums by an estimated $2.24 billion, according to an S&P Global Market Intelligence analysis.
New personal auto rates approved in the first six months of 2022 are expected to increase State Farm Mutual Automobile Insurance Co.'s premiums by $1.47 billion. Berkshire Hathaway Inc.'s GEICO Corp. and The Allstate Corp. can expect their premiums to rise by $1.00 billion and $973.8 million, respectively, from auto hikes during the period.
U.S. states employ a variety of rate regulation mechanisms, including prior approval, modified prior approval, file and use as well as use and file. Some states do not require explicit regulatory approval prior to insurers using new rates. This analysis is based on when rate filings are "disposed" by state regulators and does not take into account when those new rates became effective for new and renewal business. In some instances, a new rate may have been in effect prior to the month the filing was approved by the regulator.
The overall rate impact is manually calculated based on the aggregated written premium change from all rate filings during the period as a percentage of the largest rate filing written premium for each filer in the group in every state. Overall rate impact for each group, in some states, may be higher or lower than each approved change in the period.
Auto premiums are bigger in Texas
Nearly 63% of the cumulative premium increase Progressive anticipates from first-half rate hikes can be found in the South, with Texas accounting for the bulk of them. For the filings approved during the first half, Progressive expects its premiums to rise by $913.3 million. An additional set of filings approved during July stand to add an additional $208.4 million in premiums in the Lone Star State.
Progressive also boosted its personal auto rates by double-digits in several other states in the region during the period. An overall rate increase of 16.2% in Georgia should bolster the insurer's premiums by $258.6 million.
The most impactful increase for GEICO during the period occurred in Virginia, where its calculated premiums are estimated to rise $241.4 million due to an overall rate increase of 21.9%.
State Farm's Midwestern rate hikes
State Farm received the most impactful increases in the Midwest during the first six months of 2022. An overall rate increase of 7.5% in Illinois is expected to raise its premiums by $179.7 million. The nation's largest private auto insurer estimated its premiums will rise in Minnesota by $113.5 million from an overall rate increase of 12.5% there.
Progressive expects its personal auto premiums to grow by more than $100 million within two states in the region. The largest estimated premium increase of $142.3 million will occur in Minnesota, followed by Ohio at $107.7 million.
* Download a template to analyze insurers' rate changes over a selected period.
New Jersey sees biggest Northeastern premium gains
In aggregate, New Jersey is expected to see the largest increase in premiums from rate hikes by the Big Four auto underwriters within the Northeastern U.S. GEICO's overall increase of 6.9% in the Garden State is expected to raise its premiums by $121.4, the largest calculated premium increase in the region. An overall rate increase of 7.1% stands to raise Allstate's New Jersey personal auto premiums by almost $55 million, while a 7.9% rate hike for State Farm would boost its premiums by $52.6 million.
GEICO's increase in Oregon is largest in the West
GEICO received the most impactful rate increases in the West during the first half of the year. Its overall rate hike of 20.0% in Oregon could grow its premiums by $73.2 million.
The state of California is noticeably absent from the analysis of rate changes during the period. The largest personal auto premium state in the country has not approved a single personal auto rate increase in over two years.
