By Carey Anne Nadeau, Co-Founder and Co-CEO of Loop
Even though Millennials and younger drivers are driving less in 2021, their car insurance has gotten more expensive. In the last year, 18 to 44 year olds paid 6% more in 2021 for car insurance, according to recent research, and the number of people paying between $1,500 and $2,000 doubled since 2020.
Rate hikes are acutely affecting Millennials and younger drivers. In the same study, older drivers experienced the opposite trend, paying 1% less overall. Over the same period, older drivers paying between $700 and $1,000 doubled.
Volatility in credit scores during the pandemic is to blame, at least in part. Because credit weighs heavily into traditional auto insurance pricing, drivers see their car insurance bills go up as a result of job loss, exhausted savings, student loan bills, and higher credit usage during the pandemic. Consumers with a high school diploma, rather than college degrees and blue-collar jobs will also pay more.
Usage-based insurance options, that allow drivers to pay less for driving less don’t work well for women and urban drivers. These groups are not pausing their driving during the pandemic – 80% did not change their driving routine -- mirroring the demographics and reality of essential workers who have continued to drive throughout 2020 and 2021.
It is likely that rates will continue to go up into 2022 because car crashes and very severe crashes are happening more often than ever. 2021 was a record year for total number of fatal crashes, despite far fewer cars on the road, according to the federal agency responsible for tracking fatal crashes, called National Highway Transportation Safety Administration,
There will be many unforeseen consequences of the pandemic, but these trends – high and increasing car insurance bills, affecting essential workers most – demands a more fair and just approach to car insurance, like Loop, that evaluates drivers based on data related to safety. In my opinion, there’s never been a more important time to ensure prices are fair and drivers are safe on the road.