Every day you read a new article on the effects of inflation on the things we buy.
Let me try to explain what is happening in the automobile insurance market. When the COVID lockdown occurred auto insurance companies quickly realized people were driving less and claims costs were going to go down. Most of the large insurance companies lowered their rates or returned premiums in the form of dividends.
When the COVID restrictions were lifted, people who had been locked up in their homes began driving more. They went to work, they went on vacation and they had more claims. The auto insurance industry reacted to the increase in driving by raising rates.
At this same time, inflation increased to a 40-year high and supply chain issues caused delays in repair of vehicles and increased the price of used vehicles.
Automobile policies have been affected on every section of coverage they provide. When there are delays in repairs, the insurance companies that are liable for the repairs are now paying more for rental reimbursement. The cost for parts has increased and labor cost are up. Vehicles that are totaled (determined to be not repairable) are now receiving higher payouts. More vehicles are being totaled because of higher repair costs. The simple cost of towing a vehicle has increased because of gasoline cost and labor charges.
An article recently appeared in The Wall Street Journal about how the theft of catalytic converters is 10 times higher than 2019. Converters used to reduce pollution in automobiles contain precious metals, and sophisticated rings have been formed to steal them.
Medical payments have increased because of higher costs in hospital and nursing facilities.
Weather-related events are also increasing the number of claims. I recently read that 50,000 to 70,000 cars were destroyed by Hurricane