The adage “success comes at a price” is particularly poignant when it affects a company AND its customers. Rising to the pinnacle of the National Association of Insurance Commissioners (NAIC) list of top insurance companies in the U.S.*, State Farm Insurance assures its customers that they are “more than just a policy number.” Unfortunately, in the face of a growing trend in costly car accidents and several wildly disastrous natural events such as hurricanes and wildfires in 2017, those policy numbers will likely see a hefty rate hike in 2018.
It’s Economics 101, plain and simple. A business – no matter the industry – must sustain higher profits than losses in order to survive. In 2016, SNL Financial reports that State Farm Insurance Group wrote $38.19B in premiums, had already increased premiums by 7.25% (since 2015) and still bore the brunt of a combined loss ratio of 117%. As the final tallies roll in for 2017, it’s believed that more rate increases are on the way for policyholders. This will likely be the case for policyholders from a number of other highly recognized and highly ranked insurance companies that also witnessed combined loss ratios of over 100%.
The scenario outlined above will be particularly true for insurance policyholders in Georgia. The Atlanta Journal-Constitution reported as early as July 2017 that Georgia led the nation with the highest increase in personal auto insurance rates in 2016 at a whopping 12.2% (according to an analysis by S&P Global Market Intelligence.) To lend some perspective, the national average of rate increases was just 5.6%. As a matter of fact, Georgia ranked either first or second nationally for increases in 2013, 2014 and 2015, as well. The same article goes on to suggest that “the industry blames big increases in traffic, accidents and the cost to repair autos in Georgia.” In keeping with indications that State Farm policyholders could see future rate increases, the AJC also reports that “State Farm Mutual, the state’s largest insurer with more than 1.5 million policy holders, imposed two increases in 2016: one for 4 percent and another for 11.1 percent. Another State Farm company — State Farm Fire and Casualty, which covers more than 100,000 policy holders statewide — imposed two hikes in 2016 that were both whoppers: one at 19.8 percent and the other at 9 percent.” Long story short, even if you’ve never had an accident – depending on your carrier – your rates are likely to rise in 2018… potentially by a sharp measure.
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* By market share