I think this is affecting all auto carriers, and the loss ratios have been out running any rate the carriers have taken to date. Will be some disruption over the next few years, as all auto carriers will have to make sure they charge the correct rate for the risks. This may mean 20% or higher rate increases coming for the next 12 months.
The reason State Farm will lead the parade is the same reason all the other carriers will have to raise rates: If they do not, they will go out of business. A butcher cannot continue to sell steak at $4 / lb if his cost is $6 / lb. Simple math.
State Farm loss was due to rate. They are adjusting as we speak. Their AOP will be inline by year end. As cost go up, so must rate. As previously said, simple math.
State Farm is rocking along at a 108% Combined Ratio and AIG is doing a 131% Combined. Not to be out done, Allianz is a smooth 138% Combined Loss Ratio. Oops, someone’s head will roll with those numbers.
I wonder if non-standard drivers are the same as the cell addicts that keep running over people with distracted driving.
I expect there are a lot of things you wonder about.
If State Farm’s 7 billion loss is an indication, it is not just Non-Standard drivers.
http://www.insurancejournal.com/news/national/2017/03/01/443224.htm
I think this is affecting all auto carriers, and the loss ratios have been out running any rate the carriers have taken to date. Will be some disruption over the next few years, as all auto carriers will have to make sure they charge the correct rate for the risks. This may mean 20% or higher rate increases coming for the next 12 months.
Why do I think State Farm will lead the parade with 20+% rate increases?
The reason State Farm will lead the parade is the same reason all the other carriers will have to raise rates: If they do not, they will go out of business. A butcher cannot continue to sell steak at $4 / lb if his cost is $6 / lb. Simple math.
The predictive modelers are going crazy now. Best laid plans have suddenly gone awry.
State Farm loss was due to rate. They are adjusting as we speak. Their AOP will be inline by year end. As cost go up, so must rate. As previously said, simple math.
State Farm is rocking along at a 108% Combined Ratio and AIG is doing a 131% Combined. Not to be out done, Allianz is a smooth 138% Combined Loss Ratio. Oops, someone’s head will roll with those numbers.