Arizona auto insurers are raising rates to help cover higher claims costs after giving customers premium relief in 2020 amid the COVID-19 pandemic.
David Wichner As if spiraling gas prices weren’t enough, motorists across Arizona and the nation are paying more for auto insurance as repair costs and more crowded roads push premium rates higher.
State Farm Mutual, the state’s second-largest auto liability insurer filed an 0.4% rate increase for its Arizona private-passenger auto customers, effective March 1. Claims costs riseInsurers say they need higher premiums to offset higher claims losses since the height of the pandemic, citing factors including increased driving and higher repair costs driven by supply-chain issues and labor shortages.
At the same time, Passmore noted, the severity of accidents including fatalities have risen and repair costs have increased. A report issued by the American Property Casualty Insurance Association in February said higher claims costs are being driven by increased driving and worse driving behavior, higher medical costs, increased injury-claim settlements, increased injury severity in auto crashes and skyrocketing auto repair and replacement costs.
While California was the only state to require insurers to give auto policyholders a break on their premiums as claims plummeted amid COVID-19 shutdowns, Arizona was among many states that encouraged insurers to offer premium relief, Klug said. Insurers should have returned about $30 billion more to policyholders, based on lower losses — including $648 million in Arizona, says a report last August by the Consumer Federation of America and the Center for Economic Justice.
Passmore said regulators and insurers must ensure that rates are not unfairly discriminatory and that there’s sufficient rates to ensure the solvency of the carriers.
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