It’s hard to believe we’re already one month into the new year. As you can likely guess, the insurance landscape is set to experience some significant changes — yet again — in 2024. Rather than being caught off guard, I want to let you know what to expect this year. But before I do that, I must provide a little bit of context as to why these changes are occurring.
- The auto and property insurance industry paid out billions of dollars in losses during 2022 and 2023. Inflation, as we all experienced in other areas of our lives, also impacted the insurance industry. In addition to inflation, other factors had a significant impact on what we are seeing today. For instance, the vehicle chip shortage that began during COVID shutdowns has continued for the past few years. The lack of available chips not only limited the supply of new vehicles being manufactured but also greatly increased the sale prices for the vehicles already sitting on dealership lots. And, without a supply of new vehicles available, people turned to purchasing used vehicles. With ALL vehicle costs increasing, insurance carriers were faced with unanticipated larger claim payouts that were not factored into vehicle premiums.
- We are all seeing more EVs and vehicles equipped with ADAS (advanced driver assistance systems) on the road. If one of these types of vehicles is damaged because of an accident, repairing can be more difficult as they require specialized technicians. The personnel issues many businesses faced these past several years also impacted the vehicle repair industry causing other delays and/or increased repair costs.
- To rein in losses, insurance carriers had to make some difficult decisions. While a few carriers opted to leave the state of California entirely, others chose to implement underwriting restrictions to limit new business through waiting periods, increased documentation, and/or accepting only California-designated good drivers.
What to expect in 2024:
- Claim costs will remain high due to vehicle repair costs and overall payouts.
What this means for you: Expect your monthly insurance rates to increase, even if you have a clean driving record. - Carriers will continue with waiting periods for new policies and limit their acceptance for drivers not meeting the definition of a California Good Driver (i.e. Prop 103).
What this means for you: It could be harder to shop for insurance. Contact me to find out if you qualify as a California Good Driver. - Carriers will seek and receive unprecedented rate increases to bring carriers back to profitability.
What this means for you: Anticipate a premium increase. Most insurance carriers have filed for or already received approval for rate increases. Unfortunately, these increases are double digits.
- Carriers should reopen markets.
What this means for you: For those who qualify as a California Good Driver, there will be more options, which means the ability to price compare. Remember, though, it’s not always about the price. Cheap insurance is not always better. Make sure the coverage you are purchasing adequately protects you and your assets. - Higher insurance rates are here to stay. ☹️
What this means for you: I hate to be the bearer of bad news, but as vehicles continue to include more and more advanced technology and medical costs continue to rise, insurance premiums will correlate to the costs associated with the risk. One way to limit or offset increases is to consider completing traffic school if you receive a minor violation. Although you will pay for the course, if all other traffic requirements are met, the violation will not appear on your driving record. Minor violations remain on your driving record for three years, and as a result, can negatively impact your premiums for a considerable amount of time.
Questions? Call me at (714) 841-3656 or email me at kari@socalinsurance.co.
