As far as how much USAA is paying out, I believe Nords shared some staggering numbers a while back (can't remember if it was here or on his blog). I do recall that for every $1 in premiums they took in, they were paying out MORE than $1 in claims, and that's not a good business model. I also recall that the #1 auto claim were accidents where an "overlapping front end collision" occurred, and the brakes were NOT APPLIED (as in...NOT PAYING ATTENTION). Add that to the fact that many loses are very expensive; technology in cars is making it cheaper to total them in many cases when a few years ago, that wasn't the case.
I don't think other insurers are immune to this, so I can see that ALL of our rates will continue to rise and claims will get more and more expensive and not-so-great contract terms for the consumer will become the norm.
Yeah, paying out more in claims than you take in premiums is not a sustainable business model.
The numbers you remember came from an interview that I had with Wayne Peacock, USAA's President of the Property & Casualty insurance division. I did more research from the III and other industry resources (including Berkshire Hathaway). I've linked the post below.
I'll point out that USAA could have just kept sending out press releases (and policy cancellations) but Wayne sought me out personally to ask me to interview him. We've known each other for several years (through conferences) and he wanted to explain the issues in as many different channels as he could.
If there's a common theme among the issues that USAA is facing (along with the rest of the insurance industry) it would be: "It's not about you."
The primary reason for changing insurance rates (and removals of guarantees) is almost always due to a concentration of risk in a specific area of the country. Lesser reasons include vehicle design (especially safety features) and other trends (cheap gas, higher speed limits). But unless you're specifically called out at fault for an accident, then insurance companies don't scrutinize your record as closely as some people might feel. Frankly it's a lot cheaper for the company to click the "renew" button than it is to send a policy to underwriting.
On the frugal front, another reason for higher vehicle insurance rates is insuring your vehicle against collision and comprehensive loss. My spouse and I have not bought a new car since 1981, and we have not had collision or comprehensive insurance for over 30 years. In a stunning coincidence, our vehicle insurance rates have remained flat for... over 30 years.
Your Auto Insurance Premiums Are Rising, But It's Not Just You - Military Guide
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Related subject:
Would you like to have your insurance question answered by a USAA exec or program manager?
Next month I'm returning to a USAA conference for military bloggers. (I've attended them since 2011 and, for some inexplicable reason, I have a reputation there as a hardcore personal-finance nerd.) One of the privileges of this conference is my opportunity to interrogate their execs on various programs, policies, and future projects. I might already know the answer to your USAA questions, but if I don't then I know how to find out.
The conference is 19-20 September and I'll blog about it (both before & after). Feel free to ask me your questions here or by PM or by e-mail at NordsNords@Gmail.
Here's an example from last year's Digital MilEx:
USAA Provides Answers To The Most Important Member Questions - Military Guide