These days, every year seems to be more hectic and chaotic than the last. But there is no doubt that 2020 is unlike anything any of us have ever seen before. The COVID-19 pandemic is transforming the world in so many ways — even beyond all the tragedy, pain, and economic shock.
All businesses and all industries are being disrupted as we enter a new normal. And the auto insurance sector is no different.
It is almost impossible to forecast the future when you’re still standing in the eye of the storm. But it goes without saying that the auto insurance market, along with the wider insurance market, will be impacted in major ways.
There is still a long road ahead before we will know all the fallout. But the following trends and developments are a few of the things that consumers should keep an eye on in 2020.
1. These Are Unprecedented Times
While auto insurance is a more stable market than many other areas of the financial services world, it too has seen some waves. Policy shopping was at record levels early in the year, for example, then it dropped considerably once the pandemic hit, according to the Insurance Journal. It is hard to say exactly how this all will impact the auto market in particular. But the overall insurance market will be paying out a massive volume of health and business interruption claims. We are yet to know how this will all play out but it’s safe to say that these companies will be re-evaluating many of their strategies in the months and years to come.
2. Savings on the Horizon?
Insurers with operations in the medical and property/casualty sectors are getting hammered. Auto lines, however, will likely pay out fewer claims in this work-from-home era when fewer drivers are on the road. If these patterns continue — or if some companies gain a larger market share by cutting rates — there may be opportunities to find savings or increase your coverage. It’s still impossible to say. But it may be wise to stay on the lookout for special offers through the end of the year. Many drivers, such as military members and veterans who get their auto insurance at a discount through USAA, already recognize the importance of finding the best deal in any climate. But adopting this mentality should be at the top of everyone’s agenda as we move forward in the new normal.
3. Looming Legislative Changes
Some things that have nothing to do with the pandemic are also changing. Insurance regulations are often tweaked here and there, but the sector in Michigan is experiencing major reform this summer. The specific change relates to drivers being able to select their level of personal injury protection (PIP) coverage and accept more risk if they want. In general, this is expected to save people money on premiums in a state with exorbitant costs, but it will vary by person. And while this is likely to be the biggest legislative change of the year in any U.S. market, it highlights why consumers should always be on the lookout. The times, they are always a changin’.
Auto Insurance Landscape in 2020
What does COVID-19 and the overall chaos of 2020 mean for the day-to-day driver? Well, in such a stable industry, rates are probably unlikely to actually spike or plummet. Policies don’t exactly fluctuate like barrels of oil. But consumers should know that many providers are large financial firms whose tolerance for risk may change overall as the economy continues to falter.
We are living in very strange, unprecedented times. How will the new normal alter operations across the insurance industry? Will some providers start to rethink their level of risk tolerance and business strategies? And remember that, irrespective of any pandemic, there are always changes happening on the local level, as we are seeing this summer in Michigan.
As always, most drivers just want the best coverage they can find at the cheapest rates. And, today, more than ever, finding savings and great value is important for every family. It’s impossible to know what’s ahead — for insurance or anything. But keep an eye out and you might just be able to benefit.