October 5, 2021 – Significantly higher vehicle repair and replacement costs will lead to a significant reduction in underwriting margins for insurance companies.
S&P Global Market Intelligence’s Annual U.S. Auto Insurance Market Report Projected Car Accidents Rebound to Pre-pandemic Levels, Average Claims Cost Rising as the costs of bodywork and used vehicles increase rapidly.
“Auto insurers have provided estimated premium relief of $ 16.4 billion to their customers in 2020 as Covid-19 has reduced commuting and leisure travel,” said Tim Zawacki, senior analyst for FIG at S&P Global Market Intelligence. “In 2022, some of these customers could face higher auto insurance rates as carriers respond to a return to normal driving habits and claims costs continue to rise.”
Some auto insurers will continue to seek significant rate increases in response to adverse claims trends. The report forecasts growth in direct written individual auto premiums of 3.1% in 2021 and 5.4% in 2022. Commercial auto premiums are expected to increase by 14.2% in 2021 before slowing to 8.4% in 2022 .