Why the auto insurance companies are losing their money?

U.S has got the highly destructive natural disasters in the year 2018 that had resulted in the insurance claims to cost in billions of dollars. Along with the home insurers the auto insurers were also affected with this. There are several other factors like the wrong driving which had led to an increase in several road accidents. Along with this with the shifting of auto industry to high tech cars which are very expensive to repair had led to great loss for the insurers.
The record setting natural disasters: According to the primary report from California department of insurance the wildfires had caused around $123 million in non-residential and auto insurance claims as estimated. On that hurricanes Florence and Michael had caused $14.6 billion and $7.7 billion in insurance losses. Damage which has been caused due to car flooding during hurricane or burning of car due to wildfires which are covered by the comprehensive insurance of the car. Under this kind of coverage, you can replace the car or repair the damages.
Increased driving accidents due to distraction: The increase in insurance rates is also due to the increase in the frequency of car crashes which were merely due to the distracted driving which is mostly due to the use of phones while driving. According to the National highway traffic safety administration’s report, in the year 2015 nearly 2.443 million people got injured due to distracted driving crashes that was actually 2.217 million in the year 2011. So, in order to make the payments for the insurance claims the insurers have raised the rates of their insurance.
The expensive vehicle repairs: The latest cars do come with an expensive technology and are very sensitive that lead to higher costs for repair for the new vehicles. In order to make up for the loss, the insurers have increased the premiums. It has been specified by NHTSA regulations that all new vehicles must have the rear view video system as of May 2018. This technology in the vehicle has earlier proven to reduce the frequency and number of accidents that are caused by human mistakes. This has been made common while it’s an inexpensive repair. Earlier like the bumper replacement was very expensive, thus leading to the increase in losses for the insurance companies. So in order to compensate for their loss they have increased their rates.

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