For one of the biggest insurance companies 2016 wasn’t a great year as far as car insurance policies. State Farm auto insurance reports that it lost more money providing drivers with coverage in 2016 than they have in any other year since its creation 95 years ago.
The biggest auto insurer in the United States by far, State Farm received $35.8 billion in claims and adjustment expenses in 2016. That total, in combination with the operation costs for that segment led to an approximate $7 billion loss. Of course, this is an increase over the figures from last year. In 2015 the loss was about $4.4 billion for its auto insurance underwriting. This represents a 63 percent increase in one year.
So where does State Farm place the blame on this dramatic increase? Distracted drivers are a big contributor to the increase in traffic incidents being reported throughout the country. A large number of industry analysts are calling the staggering increase in losses at State Farm as the most visible indicator of distracted driving trends. Many people have been pointing to the rise in mobile device use by drivers while behind the wheel.
Distracted drivers are probably the biggest reason, but not the only according to reports. Also, driving costs up are other factors at play which have been propelling the losses upward. For instance, both medical costs and repair prices have been seeing a sharp rise over the last few years.
So, other than an interesting fact, what does this mean to the rest of us? Well State Farm, along with many others in the insurance industry will be passing on the cost to the consumers. Customers are now wondering if they will be facing additional rate hikes following these newly released figures. Moreover, that insurer isn’t the only one feeling the pinch from these trends. Allstate has also boosted its rates by substantial amounts for the last two years in order to keep up with costs.