Statistics Show that Informed Policyholders can Reduce CostsWhile homeowners’ insurance is undoubtedly on the rise thanks to recent natural disasters across various states, a look at
auto insurance statistics does not offer such obvious and straightforward conclusions.
On one hand, the
National Association of Insurance Commissioners believes that between 2004 and 2008 the costs of insuring a vehicle dropped by 6.75%. However, the
Bureau of Labor Statistics claims that insurance premiums rose by 3.4% over the same span of time. ‘
You would think that one of these well-respected institutions has done some bath math. But this is not the case. The simple solutions is that while both institutions claim to be measuring the same thing, the price of auto insurance, the formulas that they use to do so tell a very different story.
The BLS, for example, takes theoretical driver profiles, gets various quotes from various insurers for each of these theoretical people, and then tracks the increases in premiums over time. The obvious downfall of this system it that real people would have some changes in their car insurance coverage over this span. Not-real people cannot adjust deductibles, change protection levels, or change insurers. Naturally, the price for the same exact policy will increase over time.
The NAIC measures the changes in car insurance over the years by tallying how much policyholders pay for their different coverages, then dividing that number by the total number of policyholders, showing a more realistic estimate of what the insured in the state actually pay. In this case, by comparing the numbers from 2004-2008 the NAIC concluded that the costs of insuring a car dropped by 6.75% during that span of time.
So what can you infer from the disparities between the two numbers? Active and informed policyholders, who search out the best deal and adjust their coverage as dictated by their financial situation, can manage to lower what they pay in car insurance premiums. Stagnant policyholders are at the mercy of their insurers and end up paying more.