Farmers Insurance Group of Cos. raised its private auto insurance rates by a weighted average of 17.6% across 43 states in 2023, outpacing the rate hikes of its competitors but part of the broader trend in the industry, where double-digit increases have become the new norm.
According to S&P Global Market Intelligence’s RateWatch, not only did Farmers Insurance lead this surge, but all 10 of the top auto insurers in the U.S. also imposed double-digit increases throughout the year, a shift from the more moderate rate changes observed between 2018 and 2021.
For Farmers Insurance, the 2023 rise was approximately 3 percentage points higher than its 14.5% rate change in 2022. Nebraska witnessed the company's highest increase at a weighted average of 30.4%. In contrast, North Carolina had the smallest rate hike at 1.8%, with other states like New Jersey, Vermont and Colorado experiencing increases below 10%.
This pattern of substantial rate hikes was not unique to Farmers Insurance. State Farm Mutual Automobile Insurance Co., another industry giant, reported a 16.0% weighted average rate increase in 2023. Similarly, Berkshire Hathaway Inc.'s GEICO Corp., despite having the lowest effective rate change among the top insurers at 10.1% in 2023, had experienced the previous year's highest at 17.2%.
The industry-wide trend of escalating rates was further evidenced by the nationwide effective rate change. In 2023, 43 states and Washington, D.C., reported an effective rate change greater than 10%, leading to a national average increase of 14.0%---a significant jump from the 11.4% national average increase recorded in 2022.
States like Nevada, Minnesota and Washington faced some of the steepest increases, with Nevada topping the list with a 28.3% rate hike. At the other end of the spectrum, Hawaii and North Carolina recorded the lowest weighted average effective increases at 3.8% and 4.3%, respectively.
The continuous climb in rates over the past two years has resulted in substantial cumulative increases. Texas emerged as the state with the highest cumulative rate increase over the two-year period at 45.5%, closely followed by Ohio with a 38.9% rise.
The data was sourced from disposed private passenger auto rate filings collected by S&P Global Market Intelligence and submitted to the Department of Insurance in various states.
