Growing auto premiums move more Americans to forgo coverage
Auto insurers are spending more on claims and other costs than all the dollars that they collected in premiums in 2022, J.D. Power reports.
As auto insurance premiums continue to increase, more Americans are deciding to skip coverage, according to J.D. Power. During 2023’s second quarter, 5.7% of U.S. households with at least one car reported not having auto insurance, up from 5.2% during the same period in 2022.
In addition, the number of policyholders shopping for auto insurance hit an all-time high during the second quarter, with 12.5% of policyholders actively looking for new coverage, J.D. Power reported.
J.D. Power pointed out that the rate of uninsured drivers sees dramatic regional differences. For example, South Dakota recorded a 108% increase in uninsured drivers when comparing 2023’s first half with the first six months of 2022, while Hawaii saw a 37% decline in uninsured motorists.
Other states that saw big jumps in uninsured drivers were New Hampshire (84%), West Virginia (50%), Oregon (47%) and Indiana (38%). J.D. Power reported that in addition to Hawaii, Washington, D.C.; Maine; Arkansas; and Rhode Island each saw reductions in uninsured drivers of 20% or more.
While personal auto rates are increasing, insurers are still struggling with rate adequacy in the line. U.S. auto insurers spent 12% more on claims and other costs than all the dollars that they collected in premiums this past year, according to J.D. Power, which reported the industry has faced this predicament for the past two consecutive years.
However, for policyholders that haven’t had any claims, the rate increases come off as “arbitrary and unjust,” according to the market research company.
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