Personal auto insurance affordability 3 times worse in Louisiana than most affordable state, IRC study finds

NEW YORK, August 25, 2022 /PRNewswire/ — The least affordable state for personal auto insurance continues to be Louisianawhere the share of household income they would pay for auto insurance was three times higher than in the most affordable state, according to a new study by the Insurance Research Council (IRC), a division of The Institutes.

“Insurance Research Council study shows improving affordability of personal auto insurance, with costs as a percentage of median household income falling steadily between 1990 and 2010 across the U.S., falling to 1.56 % in 2019, the latest year for which data is available,” said Dale Porfilio, FCAS, MAAA, IRC president. “However, our study showed that there is a 3:1 disparity in affordability among the least affordable state and more affordable.”

According to the IRC study, the three least affordable states for personal auto insurance, based on costs as a share of median household income, are:

  • Louisiana (3.01%)
  • Florida (2.42%)
  • Michigan (2.33%)

The three most affordable states, based on spending as a share of median household income, are:

  • Hawaii (0.95%)
  • New Hampshire (0.99%)
  • North Dakota (1.00%)

The IRC study, State Variations in Auto Insurance Affordability, focused on the key cost drivers underlying insurance pricing. Factors that determine affordability vary given the state-based regulatory system that governs auto insurance in the US. The criteria that the IRC assessed when examining the 50 US states and District of Columbia included the following:

  • Frequency of accidents
  • Repair costs
  • Relative frequency of injury claim
  • Severity of Claim of Damage
  • Medical use
  • Involvement of the lawyer
  • Claim abuse
  • Uninsured drivers
  • Judicial climate

Porfilio, who also serves as Triple-I’s chief insurance officer, said, “Our report seeks to illuminate these differences with a comprehensive state-by-state analysis that can help guide policymakers as they work to improve overall affordability of vehicle insurance in their market”.

In the 1990s, auto insurance costs averaged 1.93% of household income, falling to 1.70% in the 2000s and 1.60% in the 2010s, the IRC study showed. The arrival of the pandemic in 2020 and the increasing frequency and severity of auto accidents in 2021 and 2022 have significantly changed the auto insurance market since the end of 2019, an Insurance Information Institute (Triple-I) issue summary found. at the beginning of this year.

About the Insurance Research Council
The Insurance Research Council (IRC), affiliated with The Institutes, is an independent, not-for-profit research organization supported by leading property and casualty insurance companies and associations. The IRC provides timely and reliable research to all parties involved in public policy issues affecting insurance companies and their customers. The IRC does not lobby or advocate legislative positions.

About the Institute Risk and Insurance Knowledge Group
The institutes, a leading provider of knowledge solutions for risk management and insurance, offer innovative education, research, networking and career resources, including professional designations such as CPCU® program, leadership programs, continuing education courses, events and conferences, associations, custom solutions, publications and assessment tools.

CPCU is a registered trademark of The Institutes. All rights reserved.


Video: State Variations in Auto Insurance Affordability

SOURCE Insurance Information Institute

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