The year 2022 comes in the already typical tax and insurance rises that come with the New Year. Drivers should be aware of, and well prepared for, the rise in insurance premiums that will be recorded to safeguard them against damage and possible theft.
Although the final list with the new values has yet to be set, given the actions done to restart the economy and recovery from the pandemic's impact, a significant increase is projected in this circumstance.
The rise in 2020 was 25%, a rate that may be repeated the following year. This takes into consideration a variety of market factors, as well as the fact that insurance firms are subject to external changes and the plans' generic values.
According to the specialist web SeguroCanguro.com, the fact that the dollar will end the year with a value close to 4,000 pesos and rising cannot be overlooked, resulting in an increase in the value of replacement parts (which in many cases have to be imported). As well as the automobile market's crisis, which has emerged as a result of manufacturing failures and a scarcity of raw materials.
All of these elements can cause scarcity or a delay in the importation, resulting in a significant rise in the processes and the time it takes to receive them. This factor increases the amount of time a vehicle can be in the workshop or out of service.
"It must be noted that the expenses of managing claims as a percentage of the premium paid by the customer have risen significantly." They were 56 percent in October 2020 and 69 percent in October 2021, respectively. AND the effect it has had on insurance technical results is significant; instead of a positive margin of 3% in October 2020, the industry now has a negative margin of 8% in the same period of 2021, "stated by Marn Alvemo, CEO of the digital platform.
Because of the growth in the commercialization of used vehicles in the nation, particularly in the reference brands in the Colombian market, consumers will be forced to renew policies (at a greater cost than a new car) owing to spare parts projections.
In the last quarter of 2021, there was an almost 70% rise in simple crashes, which raised the demand for components.
The time required to finish the import procedure has doubled, representing an exponential rise.
All-risk insurance coverage for a private automobile cost almost $ 2,800,000 at the end of this year. With the considerations indicated above, a rise of 500 thousand pesos might be expected in 2022, implying a payment of $ 3,200,000.
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Here’s What Auto Insurance Buyers Can Expect To See In 2022.
The insurance industry is experiencing a moderately difficult period. Rates are rising in general, but specific lines of coverage, such as auto, excess liability, and cyber, are seeing considerable increases. Here's what to expect in 2022 for accounts with decent loss records and risk management systems in place.
- Unsafe Driving Is A Factor In Rising Car Insurance Rates.
In 2022, increased total auto insurance prices are projected due to an increase in speeding since the pandemic, record-breaking numbers of deadly crashes, and rising claims expenses.
Arity, an Allstate-owned mobility data analytics firm, discovered that time spent driving at speeds exceeding 80 mph on journeys is around 10% greater than pre-pandemic levels. According to Arity statistics, roughly one out of every twenty miles traveled is at speeds over 80 mph.
This lead-foot approach is most certainly a contributing reason to the recent increase in road fatalities. The National Highway Traffic Safety Administration (NHTSA) discovered an 18.4 percent rise in fatal collisions in the first six months of 2021 compared to the same time in 2020. This was the NHTSA's highest-ever percentage rise.
High-speed collisions are often more severe, resulting in higher insurance claim payouts. Car insurance firms pass on their increasing expenses to clients in the form of higher premiums, even if no claims are made.
- Inflation Contributes To Rate Hikes.
Inflation can also raise the cost of auto insurance. According to Richard Attanasio, senior director at A.M. Best, "inflation trends and supply chain bottlenecks might continue to push rates, causing insurance premiums to climb."
According to a CCC Intelligent Solutions report, the average cost of vehicle parts from airbags to bumpers will rise by 6% in 2021, the biggest increase since 1997.
Drivers seeking relief from the effects of inflation on auto insurance are more inclined to browse around for a low premium. Because policies last six to twelve months, if auto insurance rates rise during that period, you'll be locked in until the conclusion of your policy term.
"People should shop around for vehicle insurance right soon before future rate rises take effect," says Doug Heller, an insurance specialist with the Consumer Federation of America (CFA). Even if consumers are in the middle of their insurance term, it is worthwhile to compare costs to see if they can lock in some savings."
- High Vehicle Values Can Be Bridged With Gap Insurance
Due to a scarcity of inventory as a result of supply chain challenges and a computer chip shortage, new automobiles are extremely expensive right now. According to Keith Daly, president of personal lines at Farmers Insurance, the cost of totaled automobile claims is rising due to higher new and used car values, inflation, and supply chain challenges.
You can file a collision or comprehensive insurance claim if your automobile is totaled, depending on the cause. A wrecked car's payment is equal to its market value at the time of the accident.
That implies that if you buy a car now at an inflated price and it is totaled or stolen later when vehicle values have decreased, you may be in a difficult situation. You'd be in debt (owe more than the value of the vehicle). The difference is covered by gap insurance, which saves you money.
For new automobile purchasers, gap insurance may be essential. The difference between the amount you owe on your auto loan and the value of your wrecked or stolen vehicle is covered by gap insurance.
According to Daly, automobile buyers in 2022 should prioritize gap insurance.
- Electric Vehicle Insurance Premiums Should Be Reduced.
When Ford unveils an electric version of its best-selling F-150, it's a sign that electric cars have finally entered the mainstream. The Ford F-150 Lightning truck was so popular that Ford stopped taking reservations for the waiting list.
Furthermore, President Biden hopes that by 2030, half of all vehicles sold in the United States will be zero-emissions vehicles. He established this objective for electric vehicles and plug-in hybrids in an executive order signed in August 2021.
Electric automobiles have historically been more expensive to insure than other types of vehicles due to increased repair expenses, higher components, and labor prices. According to industry observers, this might alter as more electric vehicles become available.
"Once EVs are back on the road, the cost of repairs may come down," says Alex Leanse, associate editor at MotorTrend. "There is still a lot to learn about how to design and manufacture EVs successfully and efficiently, which adds to the maintenance and repair complexity."
EVs with higher MSRPs have greater insurance prices, however, lower-cost models are becoming available. It also helps that the Insurance Institute for Highway Safety, when testing car models, has discovered further proof of EV safety.
- Usage-Based Auto Insurance Could Take Off
Auto insurance firms are under pressure to lessen their dependence on non-driving-related pricing factors.
Heller of the CFA anticipates a flare of public policy arguments over the use of non-driving grading factors in 2022. In numerous places, there is legislation and regulatory action regarding the use of credit scores, occupations, and gender in vehicle insurance pricing.
The integration of telematics and usage-based insurance (UBI) offers the potential to place a greater focus on driving factors. Telematics technology, which often uses a plug-in device or a mobile phone app, tracks your driving behavior and patterns. If your resultant driving score is strong enough, you should be able to acquire cheaper rates than you would with regular vehicle insurance coverage.
Usage-based insurance may not always result in lower premiums for all drivers. According to a recent TransUnion survey, "insurance prices reduced for nearly half (48%) of those participating in a telematics service while remaining unchanged for 30%." Only 18% of the remaining respondents claimed they had seen a rise, while 4% stated they didn't know."
According to Arity, over 60% of motor insurance firms in the United States offer UBI schemes. They predict that to attract new clients and retain existing ones, more insurers will provide usage-based insurance programs.
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Conclusion
Accounts are being shopped more regularly in marketplaces like this. Underwriters who used to receive 100 submissions per month are now receiving 200 to 300 each month. Underwriters are becoming more choosy in what they will consider, and where necessary, they are adding restricted endorsements.