Georgians’ auto premiums are through the roof, say consumer researchers

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Georgians’ auto premiums are through the roof, say consumer researchers

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Georgia’s auto insurance rates are moving faster than anywhere else, even if its traffic isn’t, according to consumer researchers. JOHN SPINK/JSPINK@AJC.COM

Auto insurance rates have risen by 54 percent in Georgia since 2011, faster than in any other state, according to a consumer research firm.

The spike in auto premiums is more than double the national average over the last six years, and has made insurance too expensive for many Georgians to handle, said ValuePenguin in a recent report.

Nationwide had the biggest rate increase (107 percent) during that period, while Auto-Owners had the smallest (15 percent) among the dozen companies compared by ValuePenguin. The companies account for more than 80 percent of Georgia’s auto insurance market, according to the firm.

Auto premiums have been on the rise across the nation for a number of reasons, ranging from destruction wrought by “distracted” drivers using their cell phones or other devices to a change in Georgia law that made it easier for insurance companies to boost rates.

ValuePenguin said auto insurance premiums have been growing much faster than median incomes in Georgia, which grew only 12 percent during the same period, reducing affordability for many in the state. Under state law, drivers must have auto liability insurance that meets certain levels of coverage for personal injuries and property damage.

Georgians’ auto premiums are still about average for the country, the firm said. The state ranked 26th in the country for the average annual cost of auto insurance, at $1,331 per year, according to ValuePenguin. The firm has offices in New York, London, Singapore and Seoul.

The highest-cost state was Michigan, at $3,060, while Alaska was lowest, at $769.

But insurance costs are likely to continue to rise in Georgia because insurance companies are experiencing high losses on claims in the state, said ValuePenguin.

“In Georgia, insurers have only earned about 13% more than they have lost compared to a state-by-state average of 21%,” ValuePenguin said in its report. “We found states with the highest degree of losses strongly correlates with the steepness of auto insurance rate hikes in that state.”

The measure of the cost of accident claims vs. premium revenues — called the combined loss ratio — was 87 percent in Georgia, according to ValuePenguin.

Only three other states had higher loss ratios, including Colorado (89 percent), Louisiana (89 percent) and Michigan, (114 percent), which had the second-highest increase in insurance costs over the last six years. Colorado and Louisiana also had steep increases in insurance premiums of 37 percent and 29 percent, respectively.

Drivers saw their premiums rise by at least 25 percent in most states that had loss ratios higher than 80 percent, according to ValuePenguin’s data.

Auto insurers believe distracted drivers who are texting and using their smart phones are a big factor in the rising number of crashes and traffic fatalities. Traffic deaths have surged roughly 7-10 percent in recent years, according to the U.S. Transportation Department.

Last year, the Property Casualty Insurers Association of America said the highest increases in auto collisions are in urban areas and states with big urban populations, including Georgia, where traffic congestion is getting worse.

However, Georgia may have an extra reason why drivers’ insurance bills are rising faster.

Last year, Georgia Insurance Commissioner Ralph Hudgens said he was largely powerless to stop big rate hikes -- including a 25 percent increase requested last year by Allstate Insurance -- because of a 2008 law that allows the companies to start charging new rates without prior approval.

The state agency can only block rate hikes, Hudgens said, if he determines they are unreasonably high and that "a reasonable degree of competition does not exist."

That's a tough hurdle in a state where more than 200 insurance companies operate, he said at the time.

Largest insurance increases in Georgia

Company, Premium increase since 2011

Nationwide, 107%

Liberty Mutual, 82%

American Family, 69%

Farmers, 65%

GEICO, 60%

Allstate, 52%

Progressive, 52%

State Farm, 51%

Travelers, 49%

USAA, 29%

Georgia Farm Bureau, 25%

Auto-Owners, 15%

Source: ValuePenguin

States with the biggest auto insurance hikes

State, Increase since 2011

Georgia, 54%

Michigan, 47%

Colorado, 37%

Florida, 37%

Nevada, 34%

Kentucky, 33%

Oregon, 33%

Arizona, 31%

South Carolina, 30%

New York, 30%

Source: ValuePenguin

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