What’s Driving My Auto Insurance Rates?

Insurance companies use actuarial science to analyze a lot of data to help them assess the probability of a future loss and the projected claims costs for any given policyholder. Before setting the rates, regulators in each state require carriers to document how the factors being used directly correlate to the rates the carrier seeks to charge. Whether consumers agree with the factors or not, most understand the more common factors used by carriers to determine the cost of auto insurance, including:

Meanwhile, analyzing prior claims results to determine the cost to offset future losses is not always reliable. When forecasts prove inaccurate and the cost to pay all claims outpace the premiums collected, carriers must document the reasons to support their request for increased rates when filing their new rates with state regulators.  Insurance carriers have experienced a number of factors that have contributed to more frequent claims and a higher cost to settle many claims, leading to higher auto insurance premiums for many consumers. Following are those factors: