The March 2024 Consumer Price Index (CPI) summary released by the U.S. Bureau of Labor Statistics (BLS) highlighted a 22.2% increase in car insurance rates over the past year, marking it as a notable increase within the overall inflationary pressures.
Auto insurance rates rose an average of 2.6% nationally in March. This surge in motor vehicle insurance is part of a broader trend where the index for all items less food and energy rose significantly, driven chiefly by a 5.7% rise in shelter costs.
The March report announced an overall average of 3.5% nationwide increase in inflation over the last twelve months, with a 0.4% increase in the Consumer Price Index for All Urban Consumers (CPIU) in March, according to the BLS.
Economists Neil Irwin and Courtenay Brown said the cost of car insurance coverage is “rising at unprecedented rates,” disrupting the “U.S. economy's disinflationary path.” Irwin and Brown shared their statement in an April 15 Axios newsletter.
According to a report by the National Association of Mutual Insurance Companies (NAMIC), abuse of the legal system, including practices like third-party litigation funding, is driving up insurance costs for all policyholders by increasing the number of lawsuits. This rise in litigation forces businesses to hike their prices, subsequently passing these costs onto consumers.