Think that last rate hike on your auto insurance was outrageous? You’re not
alone. Online insurance quote operation InsWeb is launching a new car
insurance price index and they say rates on average are up about 40 percent
since the first quarter of 2000.
The Sacramento, Calif.-based companyused its database of
information from the hundreds of thousands of consumers who have requested
quotes at the Web site to develop its InsWeb Auto
Insurance Index.
The index, designed to identify and track general pricing trends of personal
auto insurance sold via the Internet, suggests that since the beginning of
2000, auto insurance rates on average are rising at about 16 percent a year.
Why so much so fast? InsWeb cited rising claims costs driven primarily by
medical costs, significantly higher vehicle repair costs, rising jury awards
and continued fraud and abuse, as well as lower investment income generated
by insurers, due to falling interest rates and the decline in the stock
market.
The index is calculated from quotes viewed at InsWeb by consumers in all
states (except New Jersey and Massachusetts) for both 6-month policies and
12-month policies; it is a weighted average of the separate indices for
6-month and 12-month policies.
An average of 1.3 million quotes per quarter were analyzed.
“With prices expected to continue to rise in 2002, insurers working with
InsWeb should be able to target specific consumers to reach their new
business goals, as well as keep an eye on their existing customer base,
especially those customers with favorable risk profiles that may be sensitive
to price changes,” said Kiran Rasaretnam, the company’s senior vice president
of finance and chief actuary.
InsWeb, of course, has a vested interest in keeping sales up on its site. The
company makes more than 80 percent of its revenues from transaction fees;
insurers also pay InsWeb to pass on customer leads.
The company has not yet had a profitable quarter, according to data from
Multex Investor. For the six months ended June 30, revenues were up 3 percent
to $13.2 million. Net loss before extraordinary items was $5.6 million.