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What's Happening in the Texas Auto Insurance Market?

Updated: Mar 11, 2022

Almost every company you represent had a rate increase and chances are, there will be more.

You've seen in the news,

'Inflation surges 7.5% on an annual basis, even more than expected and the highest since 1982," reads a CNBC headline this week.

Inflation is at its worse in 40 years and this directly impacts insurance MGAs and carriers.

Physical Damage coverage has long been the balancer for carriers offsetting and lowering loss ratios against bodily injury. For example, State Farm shows a 100% loss ratio in bodily injury for the last three years.

Body shops lack of labor, rising labor costs, and lack of skilled labor are delaying repairs and causing repairs to cost more. Replacement part costs have skyrocketed due to lack of supply. In addition, claimants are staying in rental cars longer and rental cars cost are twice as much as two years ago for daily rates. Further, for the first time in history, some used vehicles now have more value than when purchased, a nearly 40% rise in value - making a total loss a hard hit to carriers. In addition, last year miles driven were the highest ever, and the more people drive the greater the loss frequency.

Most carriers and MGAs are lagging in the needed rate. The market is finally responding and some cannot respond fast enough. Kemper Specialty sent agents a notice stating they are only permitting pay in full and removing Kemper Specialty from the comparative raters, a sign they may be hurting greatly in loss ratio and cannot gain the needed rate fast enough.

Just in the news today:

“U.S. property/casualty insurers experienced an underwriting loss of $5.6 billion for the first nine months of 2021, with third-quarter losses wiping out profits from the first and second quarters, according to a report from Verisk and the American Property Casualty Insurance Association (APCIA).” Advisen, Alex Zank

Currently insurers do not know when the inflation ceiling will be reached and they will continue to take rate until they find the balance.

The greater concern for agents is the impact on consumers from many angles. The consumer is feeling the pinch of not only higher insurance rates, but worse, fuel pricing up 40% from last year, and food costs up 12%.

Until the economy finds its balance this will continue to put pressure on carriers and consumer alike.

It is an important time to communicate these events with clients so they have an understanding about the current rates and renewals. It is an important time to encourage clients to keep their policy in force and pay premiums timely to avoid increases in the short term. Retention should be the focus of your agency.

Here are this months estimated rate changes in Texas based on filings and ITC.

  • Allied +5%

  • Progressive +15%

  • LoneStar +6.5%

  • Dairyland +7.8%

  • First Chicago +1% (indications were +54%)

  • State Farm +4.4% (indications were +10%)

  • Nationwide +2%

  • Root +20% (indications were +57%)

  • Unknown amounts for AssuranceAmerica, Mendota, NatGen, and Acacia

  • Venture +3%

And last month

  • Mercury +6.5%

  • Economy +9.9%

  • Clearcover +9.1%

  • Elephant +6.6%

  • Gainsco +10%

  • Hallmark +15%

  • Apollo +6.5%

  • Aspen +12%

  • United +10%

  • Alinsco +9%

I am available if you have any questions or comments.

Don Owens

Alinsco / CEO

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