As Car-Insurance Rates Rise, Fed Up Drivers Shift Gears
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What is the main topic discussed in this episode?
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Here's your money briefing for Thursday, July 18th. I'm J.R. Whelan for The Wall Street Journal. The average annual cost of car insurance in the U.S. rose 12 percent in the past year, and it's expected to rise another 9 percent next year. As a result, more motorists are considering switching their insurer or making changes to their policy.
You want to pay a fair price for insurance, but you do have to ask what you're paying for. Sometimes it's worth to pay a little bit more for a better insurance policy. Ask yourself, what else is this providing me roadside assistance? If I've had an incident last three or four years and my insurance company was awesome, they really helped me and it wasn't a pain. Think about your relationship to this insurance company.
We'll talk to Wall Street Journal editor Jeff Rogo after the break.
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Skyrocketing car insurance rates have drivers exploring alternative solutions. Wall Street Journal editor Jeffrey Rogo joins me.
Jeff, why have auto insurance rates risen so much? So one, it costs a lot more money to fix your car. That's going to cost more. There's been more accidents. A lot of that is because of texting while driving, distracted driving.
How much did U.S. car-insurance rates rise and what are the projections for next year?
And lastly, you've just got a situation where insurance companies spent the last decade getting no return on their investments. Bonds were so low, they invest a lot in bonds, that they simply aren't making the money. In many cases, insurance companies don't make money on bonds. The money you give them, the float, what they make money off of is them investing the money you give them. And they haven't had the returns that they might have expected.
Rates have increased 12%. Are they expected to rise some more?
III, which is sort of the industry's lobbying arm, expects insurance rates to go up another 9% next year.
The research firm J.D. Power says half of U.S. auto insurance customers have actively shopped for a new insurance policy in the past year. If they call their insurance company, what's the first thing they should ask?
The first thing you should say is, hey, I'm thinking about leaving. Be direct. I am thinking about leaving your company and going to another car insurance company. What can you do for me? And if the answer is nada, They may not want you. There are a lot of reasons. They may say, look, we looked at your neighborhood and there's higher incidences of car theft or there was a issue last year with hail. We don't want to be in that neighborhood. So they're willing to lose a customer. Totally. They may say there's this big event. We have too many policies in the neighborhood. We don't want you. But ask. Say, hey, look, I'm thinking of leaving. I'm going to call around to other insurance companies. Before I do, do you want to keep me?
They might say, yes, we want to keep you. Here's a better number. And they might say, you should call around.
So what would be the process of the insurance company creating a better number for a customer?
If they don't want to keep you, the agent you're going to talk to has said, sorry, there's probably nothing we can do. If they want to keep you, they'll send you to a consumer retention division. They'll ask you a dozen to 15 questions about how much you drive, what kind of car you have.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–2:24
2
How much did U.S. car-insurance rates rise and what are the projections for next year?
2:24–7:26
3
Why are auto-insurance rates increasing so sharply right now?
7:26–7:58
4
How have higher repair costs, distracted driving and poor investment returns driven up premiums?
7:58–8:13
Speakers
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