LAS VEGAS (KTNV) — Nevada auto insurance rates and premiums have been on the move for years. Experts said consumers and their wallets might not get relief for another two years.
On Thursday, the Nevada Division of Insurance hosted a public forum on auto insurance rates in Nevada. Over the past 10 years, premiums have risen by more than 50%. Several panelists said "a perfect storm" has led to customers paying more than ever before.
"Accident frequency and severity have increased as motorists return to normal driving patterns post-pandemic. Unsafe driving practices we witnessed during the lockdowns have remained and more likely to cause accidents in denser traffic conditions. Las Vegas and Reno continue to add drivers," said Todd Rich, Chief Deputy Commissioner for the Nevada Division of Insurance. "Additionally, the cost of new cars continues to rise. The average car payment is now $750 a month. The cost of repairing newer vehicles has continue to rise. Another factor is the increased cost of medical care. Auto insurance fraud remains a notable problem. The ongoing effects of the pandemic on supply chains have led to shortages of parts and disruptions in the labor market. The cost of litigation is also a significant driver of costs."
Scott Menath, President of Nevada Independent Insurance Agents, adds that natural disasters also play a factor in prices.
"Hurricane Harvey had more than 500,000 claims put in with the flooding of vehicles. The Midwest suffers from major catastrophic events. We have fires out here on the West Coast. In Hawaii, a lot of cars were burned," Menath said. "All those factors, even though they're not central to Nevada, a lot of those tie into the overall insurance carriers' profitability and lead to rate increases."
According to the Coalition Against Insurance Fraud, insurance fraud, including auto insurance, costs the United States about $308.6 billion a year. They add that equates to about $933 per person every year or $3,750 per family every year. Menath said many people think insurers are "rolling in the dough". However, he said that's not true.
"Insurance carriers work off a combined ratio. They factor in the cost it takes to write a policy and the expected losses they're going to pay out. Right now, for every dollar a premium they're writing, they're paying out five to 10 cents on claims and actually losing profits. That's not sustainable," Menath said. "If you're working at 95% to 99% combined, as a carrier, you're doing quite well."
According to the Nevada Division of Insurance, there are over 125 companies writing auto insurance polices in Nevada and they consult with each company to rule on rate increases.
"Through our rigorous prior approval system of rate review, we make sure that any rate increases that insurers propose are justified with abundant supporting data before that rate increase is approved," rich said. "The Division ensures that auto premiums charged to Nevada consumers are not excessive and are based upon the true cost of the coverages they are purchasing."
One increase the Division did allow is higher premiums for those who own specific Kia and Hyundai vehicles.
"The treatment of Kia and Hyundai vehicles varies by insurer and some insurers have been approved to surcharge certain makes, models, and model years based on detailed data showing these vehicles [have] heightened threat frequency," said Gennady Stolyarov II, Lead Actuary, Property & Casualty for the Nevada Division of Insurance. "Data suggests a continued severely elevated risk of theft for particular Kia and Hyundai vehicles, particular from 2011 to 2023, which lack an immobilizer which prevents the engine from starting without the correct key."
Stolyarov added that based on Division data, despite both auto manufacturers offering a free software upgrade to fix the issue, only about 20% of eligible vehicle owners have gotten the updates.
When looking to the future, Nevada insurance officials said they hope that insurance companies and repair shops will be able to find a happy medium to help overall costs go down.
"Collision repairers and insurance companies should have a shared promise to the consumer - to help people in their time of need, after they've experienced tragedy and loss," said Aaron Schulenburg, Executive Director for the Society of Collision Repair Specialists. "They need solutions and support. Not just to the rising cost of insurance but to curb the increased out-of-pocket responsibility and a relief from the economic pressure to accept a less-than-acceptable repair."
You can watch the full presentation here.
