The Zebra Newsroom

Insurance rates remain volatile to reflect fluctuating shopping trends

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P&C insurance rates have fluctuated depending on carrier and region, and for good reason. Several factors have been shaping the volatile insurance industry in the past 18 months — the global pandemic and lockdown kept everyone at home, the chip and lumber shortage have left car manufacturers and home builders in a tight bind, and climate change has been impacting everyday life more often than ever before. Auto insurance rates have fluctuated depending on the carrier, as home insurance rates increased steadily throughout the calendar year.

Auto insurance rate trends

Auto rates jumped in April 2021, marking the highest year-over-year increase since 2018. Some factors contributing to the jump include the impact from previous year’s pandemic and lockdown pushing 2020’s rates down, more drivers getting back on the road, and the scarcity of cars available due to the global computer chip shortage.

Rate setting in May 2021 changed widely depending on the carrier:

  • Progressive received approval for 19 separate private auto rate reductions during the month. The carrier raised and lowered rates aggressively, holding six out of 10 of the P&C industry’s biggest rate cuts as well as the four of the top 10 rate hikes. 
  • Allstate raised rates by 3% in Maryland, marking the single-largest rate increase. 
  • USAA cut rates in Virginia, State Farm cut rates in Michigan, and Allstate cut rates in Utah.

The result of people returning to pre-pandemic driving levels means the rate of car accidents will rise, and with 2020 and early 2021 trends in mind accidents may be more severe. Premiums are expected to continue to fluctuate as carriers ride out the remainder of the pandemic.

Home insurance rate trends

Unlike auto insurance, home insurance rates have remained fairly consistent. The combination of the lumber supply shortage, the increasing severity and frequency of storms and fires, and the pandemic’s push towards home buying has been pushing home insurance rates up for the past year and a half.

Of the 357 approved homeowners rate change requests cited by S&P Global Market Intelligence report in May 2021, almost 200 of them were rate hikes:

  • Nationwide Mutual increased rates across nine states, which could result in the largest premium increase for any insurance group during that month. More than half of those premiums written will come from rate increases in Maryland and Illinois
  • Heritage Insurance subsidiary Narragansett Bay Insurance increased rate by 8% in New York, which was the single-most valuable homeowners increase in the month. 
  • Allstate raised rates by 2.7% in Georgia; this rate hike alone could account for 39.3% of the total premium increase for the Allstate group during the month.
  • Citizens Property Insurance in Florida is currently seeking approval for rate increases, which would increase rates by an average of 5.2% for policies renewed after Aug. 1. Policies renewed after Feb. 1 2022 will see an average increase of 7.6%.

The P&C insurance industry’s 2021 direct premiums written is still expected to reach its highest growth (5.8%) in 18 years.

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Jasmine Kim
Jasmine Kim

Jasmine is a licensed insurance agent and The Zebra’s newsroom content writer. With a background in B2B content writing and journalism, she reports on breaking news, trends, mergers and acquisitions, and financial reports related to the insurance industry.