Pennsylvania drivers are experiencing a significant rise in car insurance premiums, with rates expected to climb by 35% by the close of 2024, according to a recent report from Insurify. This increase comes as insurance companies grapple with escalating repair costs, a higher frequency of accident claims, and an uptick in severe weather events.
The report highlights that rates had already surged by 23% as of July, with an additional 12% hike anticipated before the year ends. “We’ve seen the most significant rate activity in the past 12 to 18 months, so many drivers may have already felt the impact of at least one substantial rate increase,” stated Chase Gardner, data insights manager at Insurify.
As of June, the average annual cost of full coverage car insurance in Pennsylvania was $1,898. By year’s end, this figure is projected to rise to $2,073.
Pennsylvania isn’t alone in facing these increases. Insurify, an online marketplace for car insurance, projects a nationwide rise in car insurance premiums by 22% this year.
When approached for comment, a spokesperson for the Pennsylvania Insurance Department, as well as a representative from State Farm, the largest insurance provider in the state, declined to discuss the rate hikes.
Gardner explained that Insurify’s projections are based on an analysis of insurance companies’ financial losses, meaning the amounts paid out in claims versus the premiums collected. “Insurance companies aim to maintain a tight balance between payouts and premiums,” Gardner noted. “However, in recent years, this balance has been disrupted, with companies paying out significantly more than they collect.”
Insurify uses historical profit and loss data to estimate future premium increases. While Gardner emphasized that their projections are a reliable metric, he acknowledged that other factors also play a role in determining rate hikes. “It might not be exactly 35%, but we’re confident it’s in the general ballpark,” he said.
The projected rate increases for 2024 continue the trend from 2023, a year that saw full coverage premiums rise by 24% following record underwriting losses of $33.1 billion in 2022. Although underwriting losses decreased to $17 billion in 2023, the financial impact was still significant enough to drive substantial rate increases in the first half of 2024, according to Insurify’s report.
While Pennsylvania’s rate increase is above the national average, it pales in comparison to states like California, Missouri, and Minnesota, where insurance costs could soar by over 50% in 2024. The report attributes these sharp increases to severe storms and wildfires in those states.
On a broader scale, Maryland tops the list for the highest car insurance costs in the U.S., with an average full coverage rate of $3,400 annually. In contrast, New Hampshire drivers pay the least, with an average annual rate of $1,000, according to Insurify.
The rising premiums are partly driven by the increased costs of vehicle maintenance and repairs, which have jumped nearly 38% over the past five years, according to the Bureau of Labor Statistics Consumer Price Index. Additionally, more frequent and severe weather events are contributing to higher auto insurance premiums. For instance, hail-related auto claims accounted for 11.8% of all comprehensive claims in 2023, up from 9% in 2020, according to CCC Intelligent Solutions.
