Rising insurance premiums are as inescapable as they are inevitable. Only now are we getting a better picture of what that means, exactly.
You’ll recall that last year Illinois-based insurance companies State Farm and Allstate bumped up their premiums by relatively significant margins: more than 5 percent. At the time, both companies justified the rate hike by citing a spike in auto crashes and a higher number of insurance claims.
GEICO bought into that logic too. The company that touts itself as a cheaper insurance option increased insurance rates by 7 percent. But as it turns out, there may be more to it than simply jumping on the insurance bandwagon. Crain’s reported today that growth at the Maryland-based company took a dip in 2015, prompting the corporate bosses to find ways to make up for the shortfall. This all came to further light this morning: GEICO boosted auto premiums by just over 6 percent in 2015—$390 million in 2015 up from $367 million in 2014. That’s a little less than the 12 percent in 2014 and 17 percent in 2013.
This latest discovery is perhaps a sign that consumers are finding other modes of transportation, which is good. But if you take into account that fatalities figure prominently in recent traffic reports—like the ones from the National Highway Traffic Safety Administration—insurers may be on the verge of exploiting the exploitable to make up for lost financial ground. States like Illinois, for example, are on pace to have one of the deadliest driving years on record. The NHTSA also reported that traffic deaths rose 7.7 percent in 2015 compared to the rate in 2014.
In an article for CNBC back in February, investor Warren Buffet, who’s Birkshire Hathaway company owns GEICO, said that he believed a factor in all of this is distracted driving, “which was listed for about 10% of the deaths in 2014,” he said. “The frequency of accidents, the frequency of deaths per hundred million vehicle miles went up quite significantly in 2015, and that’s the first time in a long time.”
Business is down and crash rates are up. That may mean your insurance policy is about to go up next.