Data & Insight

Unpacking the State of Auto Insurance

Personal auto insurance is on the struggle bus. 🚌
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Unpacking the State of Auto Insurance

In an industry once marked by stability, personal auto insurance is now confronting a drastic shift — transitioning from longstanding profitability to significant losses. 📉

Let’s dig into some numbers and decisions shaping this new era:


Personal auto insurance companies like State Farm and Allstate.


  • Main Issue: The personal auto insurance industry is facing significant losses.
  • Financial Indicators: S&P Global reports a startling combined ratio of 111.8 for 2022 in the personal auto insurance line, indicating an underwriting loss of $11 for every $100 collected in premiums.
  • Rate Hikes: In response to these losses, insurers are implementing double-digit rate increases.


  • The shift has become increasingly dramatic post-COVID.
  • This is the highest combined ratio in nearly 30 years.


  • Vehicle and car part theft is trending upwards with more than 1M cars stolen and 53K catalytic converters replaced by insurers in 2022.
  • Increased accident severity due to factors like distracted driving and speeding.
  • Advanced automobile technologies are leading to higher repair costs.
  • General labor shortages, especially limited qualified auto technicians.
  • Post-COVID-19 changes in driving patterns:
  • Between January 2020 and January 2022, the proportion of new vehicles sold above the manufacturer-suggested retail price (MSRP) skyrocketed from 0.3% to 82.2%, leading to increased costs for insurers in replacing totaled cars.
  • And, of course…inflation.


The industry is responding by:

  • Implementing double-digit rate increases.
  • Ditching states like California and Florida where the risk of storms and wildfires is high.
  • Overhauling their operational models and risk assessments.

What Now❓

  • According to AM Best, the combined ratio is projected to decrease to around 106.5 in 2023, suggesting that the higher rates might be helping cover costs.
  • New car prices are beginning to calm down as manufacturing returns to pre-pandemic levels.
  • There's hope for stabilization, but consumer and regulatory tolerance for rate increases will be crucial.

Check out more!

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