Over the last several years, millions of Americans have expressed some amount of concern over the price they pay for their various necessary insurance policies, including auto insurance. And while the cost of such coverage is often in the news, there’s data to suggest that while the amount they’re paying might be higher than they’d like, these plans are currently more affordable for most people than they have been in years. As a consequence, it might be wise for insurance agents to chat with their clients regularly about why insurance costs what it does, and the ways in which their plans will ultimately be beneficial to them.
In the 1990s, a consumer with an average income tended to pay about 2 percent of that income for their auto insurance coverage, but today that number stands at less than 1.5 percent, according to the latest Trends in Auto Insurance Affordability study from the Insurance Research Council. What’s interesting, though, is that this trend holds more or less true, with some fluctuations, for just about any income bracket.
Realities for low-income families
Unfortunately for people whose incomes are in the bottom 40 percent of consumers, they’re going to pay a significant amount for their coverage, even as the portion of that income their premiums take up shrinks, the report said. Those in the lowest 20 percent will pay a little more than 3.5 percent of their income, down from more than 4 percent two decades ago. Likewise, those in the second-lowest income quintile pay a little less than 2.5 percent of their income for coverage, a decline from more than 3 percent.
The richer, the better
Meanwhile, people in the middle quintile are paying less than 2 percent, down from a little more than 2.5 percent in the ’90s, the report said. And for those in the fourth and fifth quintile, the savings are even greater; the former currently spends about 1.5 percent of income on auto insurance, a decline from more than 2 percent, while the latter is at less than 1 percent, a significant proportional drop-off from the 1.5 percent seen some 20 years ago.
“There is a lot of interest in the affordability of auto insurance on the part of consumers, policymakers, and regulators,” said Elizabeth Sprinkel, senior vice president of the IRC. “This report adds to the discussion, showing that auto insurance is becoming more and more affordable.”
Insurance agents who can explain to consumers the ins and outs of their coverage, and what they might be able to do to further improve those policies, will typically be in pretty good shape when it comes to maintaining strong relationships with those clients. There is plenty of data which shows that consumers who think they have good relationships with their insurers or agents will typically be more willing to say they’re satisfied with their coverage as it stands. That, in turn, usually means they’re going to be less likely to shop around, meaning that it’s not just customer satisfaction ratings that will remain high, but client retention rates as well.