US auto insurance prices accelerate to 14.2% y/y gain, lag repair costs

US motor insurance policy inflation rose for the ninth straight month in December, showing policy costs up 14.2% year on year for consumers, still behind the inflation rate on at least one key element of the automotive claims cost basket.

The December reading from the US Bureau of Labor Statistics (BLS) showed  the second highest annual increase on record behind a one-off spike in Q2 2021 that had been counted against pandemic-driven rebates in 2020.

Mark full-year average policy costs to consumers up 9.9% from their 2021 average levels. Policy inflation has nearly doubled since July when it still trailed headline consumer inflation readings.

It's been a game of catch up to automotive claims cost inflation, although many automotive claims cost categories have been easing in 2022.

New and used car price inflation has come down sharply from a February peak. Used vehicles moved from 40% annual inflation to 9% annual deflation inside of ten months.

Inflation on parts and equipment has also eased, back into single digits for the first time since October 2021.

Only motor vehicle repair costs have posed an ever-increasing challenge. Repair cost inflation broke into double digits as recently as August and rose to within half a point of 20% for the December reading.

Tenants' and household insurance, left seasonally unadjusted by BLS, has wavered within an arm’s length of zero throughout the year, now at a positive 0.4% in December, but still down fractionally on pre-pandemic levels.

US headline consumer inflation fell 0.7 percentage points from November to a 6.4% annual rate in December. Credit went to a hefty decline in gasoline prices.

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