Majority of Americans say car insurance is becoming unaffordable

Nearly three-quarters of Americans say personal auto insurance is becoming unaffordable for the average person or family, according to a survey from car app provider Jerry, which reported car insurance rates hit a four-decade high in October 2023. Insurance premiums were up 19% during the year, on average.

As a result of the dramatic increases, 22% of U.S. drivers bought less coverage than they wanted as a way to save money during 2023. Nearly 40% of Gen Z drivers and 32% of millennials said they purchased less coverage than they wanted last year, Jerry reported, while less than 20% of Gen X and boomers said the same.

Although policyholders were feeling the pressure from growing premiums, fewer than 40% of survey respondents said they shopped around for lower rates during the past year.

Sentiment toward telematics as a way to unlock insurance savings appears mixed; 54% of driver said they would be willing to participate for lower rates and 52% said they would consider switching insurers if their current carrier required them to agree to monitoring.

However, Josh Damico, vice president of insurance operations at Jerry, said in a report that data will become the most important pricing factor.

‘Meaningful’ loss ratio declines

Personal auto carriers should see “meaningful declines” in loss ratios as inflation eases and average premiums grow, according to Damico.

“California, for example, is a state where some insurance companies stopped or extremely limited policy sales,” he wrote in Jerry’s 2024 State of the American Driver report. “As more insurers become confident in their rate levels and reenter the market, we should see a return to a normal and healthy marketplace environment, which generally equals more choices and competitive pricing for customers.”

Damico said most insurers will have proper pricing in place by mid-2024, but policyholders can expect to see “large renewal rate increases due to the cost of doing business for insurance companies.”

He anticipates that this will drive a record level of shopping and switching during the year ahead.

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