Despite recent increases in auto insurance rates, the market is still soft, according to Elyse Greenspan, a managing director at Wells Fargo.
“The increase sequentially was very modest,” Greenspan said in an interview. “The reason why there was a strong increase year over year is because the premium base in May 2020, was impacted by all the refunds.”
As the amount of driving consumers did fell, auto insurers refunded $14 billion in premiums last year, according to the Insurance Information Institute. Rates continued to stagnate, or even decline, through the first quarter.
However, the most recent consumer price index data showed the auto insurance index up 16.9% in May, following a 6.4% rise in April — the first increases since March 2020.
Auto insurers are facing a number of challenges as the econonmy reopens. Workers are returning to offices and vaccinations are prompting many people to take summer vacations. Government data from March, the most current statistics available, show driving up 19%.
The result of people returning to pre-Covid driving levels means the rate of car accidents will rise, according to Michel Leonard, III vice-president.