Major insurers hike state auto insurance rates post-lockdown

Policyholders across Arizona will soon be shelling out more money for auto insurance as cars – and associated risks – return to the road in a post-lockdown setting.

Arizona is one of the few states that do not require insurance companies to seek government approval for increases. As such, several insurers including Geico, Allstate, Progressive and Farmers have enacted auto-premium rate increases since mid-2021, according to the Arizona Department of Insurance and Financial Institutions.

GEICO, Arizona’s largest private-passenger auto liability insurer, posted an 8% rate increase in November. Early this month, State Farm filed an 0.4% increase for private-passenger auto customers in Arizona. Allstate is the latest to increase its rates – by 7%, also effective this month.

Insurers point to increased driving driven by supply-chain issues and labor shortages, backed by the National Highway Transportation Administration’s data showing that miles traveled and auto-related fatalities increased in 2021.

“No question that at the beginning of the pandemic, miles driven and claims fell off a cliff and during that unique period of time insurers did a lot of things to try to provide some relief to their policyholders,” Robert Passmore, vice president of auto and claims policy at the American Property Casualty Insurance Association, told U.S. News. “It’s taken a while, but we’re now back to the point where people are driving as much or more than they were pre-pandemic.”.

Meanwhile, some insurers like State Farm are attempting to cushion the increased premiums to absorb some of the shock from customers. Spokesman Sevag Sarikissian said State Farm offered a special premium discount in February 2021 to offset a 3% rate increase in Arizona.

“Our approach is to make incremental adjustments based on driving behaviors to help minimize the impact to customers,” Sarkissian told U.S. News. “Although miles driven, claim volume and severity have increased, State Farm auto rates remain below pre-COVID-19 levels.”