Navigating Inflation and Regulation in Auto Insurance: Insights from the Symposium

The Automotive Insights Symposium, hosted by the Federal Reserve Bank of Chicago, spotlighted the inflation-driven challenges impacting auto insurance. Experts delved into the evolving complexities of vehicle repairs, shifting consumer demands, and new insurance practices. Aaron Schulenburg, Executive Director of the Society of Collision Repair Specialists, highlighted that the sophistication of modern vehicles, more than inflation, elevates costs. Advanced driver assistance systems (ADAS), which involve intricate scanning, diagnostics, and calibrations, are rapidly increasing repair expenses.

Complex Vehicle Repairs Driving Cost Increases

Data from CCC’s crash report reveals that 87% of direct repair program appraisals included a diagnostic scan in Q1 2025, with 32% needing calibration. Schulenburg emphasized these figures illustrate the ongoing difficulties in claims management, exacerbated by varying expertise levels across repair shops and their adherence to manufacturer-prescribed protocols.

Regulatory Influence on Insurance Premiums

The symposium also scrutinized regulatory impacts on insurance premiums. Greg Brannon from Automotive Research pointed to calibration challenges at dealerships, while David Harkey from the Insurance Institute for Highway Safety underscored the necessity of precise repairs for safety. He cited a radar sensor misalignment case that a repair shop failed to address after a collision.

Doug Heller from the Consumer Federation of America highlighted significant insurance rate fluctuations in states with minimal regulatory oversight. He noted aggressive insurer pricing strategies based on inflation projections, resulting in notable rate adjustments. A case in Florida showcased required returns of $1 billion by an insurer due to premium inflation.

Socioeconomic Impacts on Insurance Access

Further analysis indicated that economic factors and insurance segmentation often drive up premiums for those with lower credit scores, among other socioeconomic elements. Heller highlighted that such practices disproportionately affect economically vulnerable groups, limiting access to comprehensive auto coverage.

Shifting Insurance Coverage Trends

The symposium examined shifts toward higher deductible plans, with Schulenburg mentioning the standardization of $1,000 and $2,000 deductibles, potentially delaying essential repairs for policyholders. Coverage trends, driven by pandemic-induced travel reductions and inflation, have led to a rise in underinsured drivers. Heller emphasized the importance of maintaining adequate liability limits to counter rising expenses, highlighting broader economic implications.

Panelists addressed the complexities of claims handling; Schulenburg noted that although repair costs have seen a modest 2% increase, this does not match policy rate hikes. Andrew Batenhorst from Pacific Collision Center observed a rise in out-of-pocket expenses for procedures not covered by adjusters, questioning the rationale behind insurance rate increases.

Legislative Reactions to Policy Changes

Right-to-appraisal legislation emerged as a response to evolving insurance policy language. Schulenburg indicated that carriers have quietly removed provisions like RTA, prompting legislative efforts in states such as Texas and Washington to reinstate these consumer rights. Overall, the symposium emphasized the need for robust regulatory oversight to stabilize insurance costs, mitigate market volatility, and protect consumers.