How to Help Your Customers Deal With Rising Car Insurance Rates

Learn about the factors driving rising car insurance costs in 2023 and how businesses can help alleviate customers' pain points by offering a solution that drives both engagement and long-term profitability.

This year, car owners may be concerned about rising car insurance costs for 2023. With inflation on the rise, it's no surprise that auto insurance premiums may go up too. But what's actually driving these increasing costs? And how can businesses best help alleviate customers' biggest pain points?

In this article, we'll explore some of the contributing factors to rising car insurance premiums in 2023 and how businesses can offer a solution that drives both engagement and long-term profitability. 

Let's Start With the Facts

Based on historical trends of auto premiums and the current state of both the industry and the economy, a recent report by research firm ValuePenguin predicts that the average annual car insurance rate will increase by 8.4% in 2023.  This would result in an average annual total insurance amount of $1,780.

This is further broken down by state. For example, Michigan has the highest car insurance rates in the U.S. (168% higher than the national average), while states like Vermont, Maine, and Idaho have the most affordable auto insurance rates (36% cheaper than the national average).

How Does This Affect Your Business?

When it comes to auto insurance, your customers will be facing price-hikes and subsequent frustration in 2023. To put it simply, many consumers will want to know they’re getting the best deal they can on car insurance. Therefore, there are big rewards in store for financial service providers who guide customers through plan comparisons, proactively search for driver discounts, and remain helpful throughout the customer flow. Enter: Harmonic’s Auto Insurance Tool. 

Harmonic's Auto Insurance Tool

Looking to bring the best and most trusted insurance products for your customers and drive additional revenue to your business? Look no further than Harmonic’s Auto Insurance Tool. Our tool provides your customers with the ability to easily compare quotes and policies in seconds, helping them find the best option quickly and conveniently. Plus, it integrates seamlessly with your app or service.

Business Potential

As listed above, the Federal Highway Administration predicts that 5 million new drivers will be on the road this year. They’ll all need car insurance. Not only that, but existing drivers who see a sizable increase in their auto premiums may be more likely to start shopping around for better rates elsewhere.

Andrew Drake, Harmonic CEO, notes that, “Auto insurance rates are going up significantly in 2023. Helping consumers deal with these rising rates is an opportunity for the businesses who can help find better solutions.” 

Integrating our auto insurance tool with your business is a strategic way for you to create additional revenue streams from your existing customers and build the brand loyalty for helping them make a good financial decision. 

What’s Driving Up Premiums?

So, what's the reason beyond the spike? Although there's not one clear-cut answer, there are several factors that could make auto insurance more expensive in 2023. 

#1 The Increase of Accident Rates

The more that people drive, the more they’re exposed to the risk of accidents. This also means that the risk of getting in an accident increases when the number of drivers on the road increases.  With the worst of the Covid pandemic behind us, Americans are excited to be traveling and are on the road more frequently.

According to the Federal Highway Administration (FHWA), there will be a projected 243.4 million licensed drivers on the roads in America, up from the 238.6 million drivers in 2022. That's a 2.2% increase in drivers—and the risk of crashes rises along with the increase of drivers. With more people driving in 2023, insurers are likely to raise their rates to account for additional claims costs associated with increased risks.

#2 Rising Loss Ratios on Claims

In addition to rising accident rates, auto insurers are facing increasing costs to cover claims and are therefore increasing insurance premiums. A recent Travelers report revealed a combined ratio of 110.5% in their personal auto business. This means that the amount spent on payout and expenses for auto claims exceeded the amount earned from premiums. 

Before insurance providers increase premiums, they’ll have to first gain approval from state authorities and wait for existing policies to come up for renewal. However, drivers can expect to see higher premiums to compensate for these rising loss ratios.

#3 Inflation

Inflation affects insurance companies just as much as it does drivers, driving up the cost of operating a business. Insurance companies must factor in rising operational costs to ensure they stay profitable while still providing consumers with quality coverage at an affordable rate. This is usually accomplished by increasing premiums—which translates into higher costs for drivers.

It's not just insurance companies that have to adjust their prices due to inflation. Gas prices, car repairs, and the cost of any car service are also likely to rise in 2023. All of these factors can contribute to higher insurance premiums as insurers account for the increased costs associated with them.

#4 Climate Change

Believe it or not, climate change is another factor that could lead to higher car insurance rates in 2023. As extreme weather events become more frequent, they can cause a lot of damage to cars, increasing the cost of repairs and resulting in higher premiums.

Wrap it Up

At the end of the day, a strategic business opportunity exists for businesses looking to integrate insurance services within their existing app or service. Not only do our insurance products offer consumers a timely and valuable solution, but they also offer you another stream of revenue. By offering a solution to new and existing customers, you can build engagement while also offering long-term value. We’d consider that a win-win.