Texas auto insurers are planning big rate hikes in 2022 - The Dallas Morning News

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If you’re a Texas driver who’s insured by one of the larger insurance providers, odds are your bills could be going up this year.

Insurance companies plan to hike rates in 2022, and some companies are raising rates by more than 20% on average statewide, according to notices filed with the Texas Department of Insurance, which regulates insurers operating in the state.

Insurance companies are required to notify TDI when they change rates and detail how much the changes are expected to affect consumers on average across the state.

State Farm, the largest insurer in the state by market share, told The Dallas Morning News that its auto insurance rates remain below pre-pandemic levels “although miles driven, claim volume and severity have increased.”

The provider lowered its auto insurance rates 12.4% in summer 2020, when pandemic restrictions meant that many people were driving less. Rates have increased 4.3% since then, according to filings with the Texas Department of Insurance.

“We are continuously monitoring and adjusting to trends to make sure we’re accurately matching price to risk. Our approach is to make incremental adjustments based on driving behaviors to help minimize the impact to customers,” spokesperson Roszell Gadson said in a statement.

Nationwide will increase its rates 2% in May, according to a filing with TDI. It’s the company’s first rate increase in Texas since before the pandemic began in 2020.

Insurers typically adjust rates slowly in response to market conditions, according to TDI. But other companies are planning larger increases or have already implemented them. Root Insurance and Redpoint Insurance both filed to increase rates 20% or more.

Allstate increased its rates 12% in February. Geico is raising its rates 9.2%. And Progressive will raise its rates 15% on average statewide in 2022 — the company’s largest single auto insurance rate hike in the state in the last decade.

What’s driving increased premiums?

The pandemic continues to have an impact on most aspects of our financial lives — and car insurance is no different.

When fewer people were driving on the road in 2020, insurance companies lowered rates and refunded or credited more than $14 billion to consumers.

But this year traffic levels are inching closer to pre-pandemic levels, collisions are becoming more frequent and the rising cost of everything from gas to labor is putting pressure on insurers.

In February, for example, Allstate told investors that it would continue raising its auto insurance rates throughout 2022 to compensate for an increase in losses.

Replacing a car costs more these days as the cost of new and used vehicles has skyrocketed due to shortages of semiconductor chips. New car prices were up 12.4% year over year in February, and used vehicles were up a whopping 41.2%, according to data from the U.S. Bureau of Labor Statistics.

When a vehicle is damaged and needs repairs, the cost of the rental car for that customer is also higher.

The price of renting a car in the U.S. hit record highs at the end of 2021, and auto technician wages are increasing as well due to a shortage of the skilled labor needed.

And when a driver suffers injuries as a result of an accident, medical costs have also increased in the last year.

How do I pay less?

Texas drivers are legally required to have their vehicles insured, so increases in premiums are felt universally.

The Texas Department of Insurance can order insurance companies to refund money to consumers if it determines that a rate change is excessive or “likely to produce a long-term profit that is unreasonably high in relation to the insurance coverage provided.” The department didn’t disapprove of any rate changes in 2020, the latest year for which it has produced a report on its rate reviewal process.

There are a few ways drivers can try to save money on their insurance.

For one, TDI stresses that it’s important for drivers to shop around for the best rates. Often, a consumer’s best chance to save a few bucks on their insurance bill is to find a new provider. The Insurance Information Institute recommends getting at least three price quotes from providers.

If you’re driving less this year than in previous years, the Insurance Council of Texas recommends calling your provider and updating the average mileage you’re driving, which may lower your rates.

A spokesperson for Allstate told The News that although its rates are going up, Texas drivers can save money with usage-based insurance programs like Allstate’s Drivewise and Milewise. Discounts will vary from company to company, but some offer discounts for good credit scores, defensive driving courses and even student drivers with good grades that consumers can ask about.

And if consumers think the rates they’re paying are unfair, they can file a complaint with the Texas Department of Insurance online here.

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Texas auto insurers are planning big rate hikes in 2022 - The Dallas Morning News
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