Auto Insurance Rates Is Expected To Be Affected By Unemployment Recession And Credit Crisis

by Ed Sneneh, Illinois Auto Insurance Agent

Chicago Illinois, 09/28/2011

Unemployment rate in the US has been fluctuation from over 9% to little under 11% in the pas couple of years, with many experts believing that the actual unemployment rate is much higher. Unemployment means more people are having less money, and people with less money are normally looking to save more on their expenses.

Recession is also driving the auto insurance business in the right direction.  Recession creates more importance to security issues in the minds of  consumers. People feel less secure during recession, hence they become more active in searching for security services. Insurance, generally speaking, is a security service. Your auto is something you need to protect, and losing your property may cause hardship if not replaced.

The third factor that is affecting the auto insurance business is the credit crisis. On one hand many standard, if not all, insurance carriers are using credit to determine the automobile insurance rates. For clients with bad credits their auto insurance rates are much higher than those with good or acceptable credit with the vast majority of insurance companies that are credit driven.  Even people with great driving records but with bad credit may not have good auto insurance rates with standard carriers.  Increasing car insurance rates for new business and renewal is pushing people do do shopping. In essence this proved to be very profitable to the majority of non standard agents who represent companies that do not use credit in the motor vehicle insurance rating system.

To summarize, while credit crisis, recession and employment are affecting the shopping behavior of auto insurance shoppers, the change is in the direction of favoring auto insurance companies that (1) Do not use credit in their rating their auto insurance quotes, (2) Compete based on price (3) Are slashing coverages/ services in the competition process. On the other hand, standard companies are stumbling to stay competitive and maintain the same high quality services that they had. Whether that will last for too long is uncertain.

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Insurance Navy, 4717 N Pulaski, Chicago, IL 60630

posted on Wednesday, April 5, 2017