THE ECONOMY
Insurance is all about risk. Car insurance pricing takes into account individual risks associated with drivers and their vehicles, but broader environmental, government and economic factors also play a role.
- Supply chain issues as a result of the COVID-19 pandemic have skyrocketed the cost of new and used vehicles. In 2021, there was a 14% increase year over year in the cost of new vehicles and a 27% increase for used vehicles.
- The cost of materials and repairs is increasing, which affects how much insurance companies have to pay for claims, and thus how much they charge for premiums.
- Insurance companies have had to adapt to a changing economy, which can mean consolidating to manage risk or changing their risk evaluation processes. These actions can all affect how they measure the risk an individual poses and how much to charge for their premium.