US private auto insurers are racing to increase premium rates as they seek to offset historically poor underwriting results.
The year-to-date nationwide average increase for private auto insurance is 11.0% through Aug. 18, 2023, according to S&P Global Market Intelligence's RateWatch application. However, there is a wide variance in the effective rate change between individual states. Nevada has had the highest overall calculated effective rate increase so far in 2023 at 27.9%, compared to a low of 2.5% in Idaho.
In total, 32 states reflect a double-digit increase based on about 8.5 months of approved rate filings.
The rate information is sourced from disposed private passenger auto rate filings collected by S&P Global Market Intelligence that are submitted to the Department of Insurance in various states. The analysis is limited to rate filings of each state's 10 largest private auto underwriter based on 2022 direct premiums written plus any of the country's 10 largest private auto underwriters outside the state's top 10.
The effective rate change is the average of the cumulative changes by renewal business effective date for each insurer weighted against respective calendar year direct premiums written reported within the NAIC property and casualty regulatory statements. For year-to-date 2023 figures, 2022 direct premiums written were used. Read more about S&P Global Market Intelligence's RateWatch.
GEICO, State Farm drive increase in Nevada
Geico Corp. has boosted its rates by a calculated effective rate of 53.8% in Nevada, the highest percentage increase among the largest US private auto insurers. The large effective rate calculation for the insurer is due to multiple approved rate filings with a renewal business effective date occurring in 2023.
The state's largest auto insurer first boosted its rates in February by an overall average of 26.3%. GEICO subsequently requested and received approval to again raise its rates by more than 20% in July. The additional rate increase is expected to take effect Sept. 18.
– Read about US property and casualty sector second-quarter 2023 results.
– Download a document with the top private auto insurers year-to-date 2023 effective rate changes by state.
Through Aug. 18, Geico has received approval to increase its rates in 36 states, with 18 of them greater than 10%. Overall, GEICO's calculated countrywide effective rate change is 7.6% against its total direct premiums written during 2022.
State Farm Mutual Automobile Insurance Co.'s multiple rate filings in The Silver State will boost its rate by 34.7%. A 9.4% overall rate increase went into effect in March, followed by a 23.1% increase in July.
State Farm has boosted its rates by double digits in 32 states out of the 46 states with approved increases. The Illinois-based insurer's countrywide calculated rate increase is 13.9% so far in 2023.
Double-digit rate increases in consecutive years
The countrywide average will have increased by double digits in back-to-back years if this trend continues for the remainder of 2023. For several years prior to the current spike in private auto premiums, the average yearly change was a low single-digit increase. The exception was in 2020, when COVID-19 spurred a rash of premiums credits to compensate consumers for their decreased driving habits.
Texas has the highest cumulative rate increase of 37.6% over the past 20 months when factoring in the surge in private auto rates since the start of 2022. Seven other states have a cumulative effective rate increase of 30% or more: Illinois, Ohio, Tennessee, Nevada, Arizona, Illinois and Utah.
The states with the lowest cumulative increase since 2022 are Hawaii (4.4%), Vermont (6.3%), North Carolina (8.2%) and California (11.1%). The relatively minimal cumulative rate increase in The Golden State is due to the almost two-year hiatus by the state regulator to approve any private auto rate increase.
