TDI approves rate hike for auto insurer of last resort
TDI approves rate hike for auto insurer of last resort | Insurance Business America
Motor & Fleet
TDI approves rate hike for auto insurer of last resort
Policyholders to see double-digit percentage increase in their pricing
Motor & Fleet
By
Kenneth Araullo
The Texas Department of Insurance (TDI) has approved a 15% rate increase for personal passenger automobile policies written by the Texas Automobile Insurance Plan Association (TAIPA), the state’s insurer of last resort.
Additionally, a 12.7% overall rate increase for commercial policies issued by the association has been approved. These changes will take effect on Oct. 1, according TAIPA.
Despite these double-digit rate increases, they are lower than the average rate changes observed in Texas in recent years. According to AM Best, private passenger auto rates rose by an average of 23.8% in 2022, while 2023 saw an increase of 25.5%, based on data from the regulator.
Rich Johnson (pictured above), director of communications and public affairs for the Insurance Council of Texas, noted that the factors contributing to these rate increases are not unique to TAIPA or Texas. He explained that the rising frequency and severity of accidents, along with increasing repair costs for parts and labor, are significant drivers of these rate hikes.
Johnson also highlighted that the number of policies in force under TAIPA is approximately 1,750. He noted that the rate increases reflect a rebound from the pandemic period when auto carriers reduced rates, offered rebates, and refunded premiums due to an expected decrease in driving
According to TDI data, personal auto rates dropped by 1.9% in 2020 and rose by 2.9% in 2021. Johnson pointed out that fewer drivers on the road during the pandemic led to riskier driving behaviors, including speeding and distracted driving, which contributed to an increase in accident frequency and severity.
The rising occurrence of “nuclear verdicts,” or extremely high compensation awards, is also influencing auto insurance rates nationwide, particularly impacting commercial policies.
What are your thoughts on this story? Please feel free to share your comments below.
Related Stories
Keep up with the latest news and events
Join our mailing list, it’s free!
