The least affordable US state for auto insurance has premiums so high that they are three times higher than the state with the most affordable rates, a study by the Insurance Research Council (IRC) has found.
IRC’s study, “State Variations in Auto Insurance Affordability,” found that the three least affordable states for personal auto insurance, based on expenditures as a share of median household income, are:
• Louisiana (3.01%)
• Florida (2.42%)
• Michigan (2.33%)
Meanwhile, the states with the most affordable auto insurance by the same metric are:
• Hawaii (0.95%)
• New Hampshire (0.99%)
• North Dakota (1.00%)
It was noted that there is a 3:1 disparity in affordability between Louisiana and Hawaii.
The study also focused on the key drivers of the costs that comprise insurance pricing. These costs include accident frequency; repair costs; injury claim relative frequency; medical utilization; attorney involvement; claim abuse; uninsured motorists; and litigation climate.
IRC noted that in the 1990s, auto insurance expenditures averaged 1.93% of household income. It dropped to 1.70% in the 2000s and further to 1.60% in the 2010s. Citing research from the Insurance Information Institute (Triple-I), the onset of the pandemic in 2020, as well as the increasing frequency and severity of auto accidents in 2021 and 2022, “have changed the auto insurance market considerably since year-end 2019,” IRC observed.
“The Insurance Research Council study shows improving the affordability of personal auto insurance, with expenditures as a percentage of median household income steadily declining between the 1990s and 2010s across the US and dropping to 1.56% in 2019, the latest year for which data is available,” said IRC president and Triple-I chief insurance officer Dale Porfilio, FCAS, MAAA. “However, our study indicated there is a 3:1 disparity in affordability between the least affordable and most affordable state.”
“Our report seeks to illuminate these differences with a comprehensive state-by-state analysis that may help guide policymakers as they work to improve overall affordability of auto insurance in their market,” the president added.
8/28/2022 Most Expensive and Least Expensive Auto Insurance Rates for US States