Los Angeles resident Angela Gould says she has an impeccable driving record.
No accidents, no tickets. Yet her car insurance premium just went up by almost 30 per cent.
“You know, if you have an accident or you get a ticket or something, you expect your rates to go up,” Gould said. “You don’t expect it if you haven’t done anything wrong.”
Gould said she shopped around but couldn’t find a better rate. So she sucked it up and paid the new premium, which cost her an extra $600.
“I know a lot of people, they’re getting by, but they can’t absorb that kind of increase in insurance,” she said.
Bob Passmore of the American Property Casualty Insurance Association, an insurance industry trade group, blamed inflation for the premium increases.
“Inflation has taken a bite out of everybody’s pocketbook,” he said.
Passmore said the cost of repairing cars was up 20 per cent. And higher-than-usual used car prices have driven up replacement values.
“If the cost of everything that car insurance pays for is going up, there’s only one result that can happen – car insurance premiums are going to go up,” he said.
Passmore said every auto insurer in California is losing money, so they have to raise rates.
But Harvey Rosenfield of Consumer Watchdog doesn’t buy it.
“We find it hard to believe that this can explain double-digit rate increases. Insurance companies have a profit motive to constantly raise rates, limit the amount of claims they pay, and seek higher rates from the insurance commissioner,” Rosenfield said.
Indeed, California Insurance Commissioner Ricardo Lara recently approved $1 billion in rate increases. And Consumer Watchdog says another $2 billion is pending.
“I think the insurance companies are taking advantage and trying to pressure the insurance commissioner to approve rates that are not justified,” Rosenfield said.
The Department of Insurance (DOI) declined the I-Team’s request for an interview. But they told us the auto industry’s loss ratio is the highest it’s been in 30 years – 81 percent. That means for every dollar they collect in premiums, they pay 81 cents in claims and expenses. The DOI says a good loss ratio is 70 per cent or less. So the companies are making less money.
The DOI also said that all rate increases must be justified under state law. And they scrutinise claims to make sure drivers only pay what’s necessary.
But that explanation doesn’t change anything for Gould and other drivers like her.
“I don’t really know what the solution is, but someone has to step in and do something,” she said.
