Insurance Companies Maintain Rate Hikes

In spite of the falling oil prices the oil companies have somehow managed to continue with their usual price hikes. Similarly, the car insurance companes have maintained their price hikes even when the gasoline prices have come up a lot. With facts like lesser number of car crashes and people driving lesser distances it is natural for the average American driver to expect a static premium structure.

In comparison to last years prices, the rate hikes have been quite alarming this year. Insurance companies have started demanding higher rates each year, some times as high as 7% in hikes. North Carolina for instance has demanded a rate hike worth 13% across the industry. State Farm has increased the rates by 3% in Illinois. According to the Insurance Information Institute premiums have come up at a yearly rate of 1.7% for the current year.

This suggests a four times hike compared to the rate hike in 2007. There are a couple of states e.g. N.Y. who have raised an alarm against such hikes. On the other hand, the insurance departments are scrutinizing different facts causing such hikes. This would certainly help them identify the probable reasons as well as the possible outcomes associated with such hikes.

J. R. Hunter of the Consumer Federation of America has directed the insurance regulators to spot possible causes of these rate hikes, even when average Americans are covering lesser in terms of distance as compared to the last year. Keeping with the gas prices, Americans are expected to drive lesser and hence file lesser claims with their carriers. As a matter of fact this process would either result in huge profits for the carriers or reduce premium rates for consumers. The state regulators and the governors would have a tough time anticipating different factors that might bring such changes within the insurance industry.