New and used vehicle prices trending down and a flat month for maintenance service costs could mean insurers will slow down their premium increases, according to a CNBC article. 

U.S. Bureau of Labor Statistics (BLS) recently reported the motor vehicle insurance index rose 1.8% in April after rising 2.6% in March. Auto insurance is mentioned as an item that had a notable increase of 22.6% over the past year. 

Multiple media agencies have reported that it is the largest annual increase for auto insurance since 1979. 

Bank of America Economist Stephen Juneau told CNBC that insurance premiums are unlikely to lower but the increases should start to slow. 

“The turbocharged increases in motor vehicle insurance premiums are a response to underwriting losses in the industry. Insurers saw losses,” Juneau says in the article. “There are signs that many insurers are getting back to profitability.”

Juneau said higher vehicle prices, increased costs for repairs, and more accidents are some factors that led to higher premiums. 

The BLS reported that new and used vehicle sales have dropped 0.4% and 6.9% in the past 12 months. Repair and maintenance costs were flat in April but still increased 7.6% from the same time last year. 

The lowering of these prices should impact future insurance premiums, Juneau said. 

Insurers also tend to point to rising labor costs and used car values as causing the hiked rates in recent years. However, the hikes continually receive criticism from consumer advocacy groups who’ve claimed insurers are overstating needs and overburdening the consumer. 

As insurers raise premiums, collision repair shops have simultaneously noted an increase in consumer responsibility for out-of-pocket expenses due to short payments. 

Federal Reserve Chair Jerome Powell mentioned the cost of insurance on inflation during testimony to the Senate Banking, Housing and Urban Affairs Committee earlier this year. 

“It is clear that insurance of various different kinds, housing insurance but also automobile insurance and things like that, that’s been a significant source of inflation over the last few years, and it’s to do with a million different factors,” Powell said during the hearing held March 7.

Insurance also remained one of the top industries that spent money on lobbying in 2023. It only trailed behind the pharmaceutical and electronics manufacturing industries, according to data released by Statista.

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