Major insurers raise state car insurance rates after lockdown

Policyholders across Arizona will soon shell out more money for auto insurance as cars — and associated risks — hit the road again in a post-lockdown environment.

Arizona is one of the few states that does not require insurance companies to seek government approval for increases. As such, several insurers, including Geico, Allstate, Progressive and Farmers, have enacted automatic 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. Earlier this month, State Farm filed a 0.4% increase for private auto customers in Arizona. Allstate is the latest to raise rates – by 7%, also effective this month.

Insurers point to an increase in driving due to supply chain issues and labor shortages, backed by data from the National Highway Transportation Administration showing that miles driven and auto-related deaths increased in 2021.

“There is no doubt that at the start of the pandemic, miles traveled and claims fell off a cliff and during this unique time insurers did a lot to try to provide relief to their policyholders,” Robert Passmore, vice president of auto and claims policy at the American Property Casualty Insurance Association, US News said. “It took a while, but now we’re back to the point where people are driving as much or more than they did before the pandemic.”

Meanwhile, some insurers like State Farm are trying to cushion the premium increase to absorb some of the customer shock. 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 on customers,” Sarkissian told US News. “Although miles driven, volume and claims severity have increased, State Farm auto rates remain below pre-COVID-19 levels.”