WA ranks #7 Auto and #14 Home for lowest insurance premiums in the US.

I am a Property & Casualty insurance agency owner in Bellingham, WA, and have been since 2017 after more than 20 years in the financial services industry focused of investments and retirement.

The biggest challenge for our customers is the cost of repairs, effectively totaling their vehicles instead of repairing them. The negative ramifications and pressure on the premiums needed is of paramount need of addressing now.

Today, 6/12/2024 I just spoke to one of the busiest & most trusted shops that had been a preferred shop with Allstate for many years. I inquired what the labor costs are per hour for the different area of repairs. These are their rates:
$78 an hour for BODY work
$78 an hour for PAINT work
$110 an hour for FRAMEWORK
$180 an hour for MECHANICAL work
$45 for PAINT & MATERIALS

While I do not feel Government should have to regulate the hourly rates for any business, I do feel the FORMULA used by most if not all the insurance commissioners that make up the National Association of Insurance Commissioners if modified from whatever that is currently could provide the relief to repair vehicles rather than total them.

In WA, like many states, we have a Total Loss Formula (TLF), not a simple percentage like many of the other states use to determine whether a vehicle is repaired or deemed a total loss.

The Revised Code of Washington is clear on what and how the TLF is calculated. It is the cost of total repairs and the “salvage value” combined if equal to or greater than the pre-accident Actual Cash Value (ACV) of the vehicle we must total the vehicle.

 
My office had a loss ratio of around 38% for years and then rose to 68.2% in 2023. It felt like we were seeing 4-5 times the number of vehicles totaled rather than repaired based on whatever the real formula is dictating that decision. If the NAIC formerly had a limit that was determined to be the top end not to be exceeded, I am certain the intent was NOT to total cars for a dinner plate size dent in multiple sections of a car or based on one quarter panel in need of replacement, but protect consumers from repairing vehicles that may have done so and jeopardized their safety or integrity of the vehicle.

No Body Shop benefits as they are not able to repair the vehicle, and clearly the insurance company is writing a larger check because of the TLF if it has to be totaled.  This action blows up the balance between premium dollars entering the pool and the claims being paid out from the same pool.  I am not an expert on math, the actuarial assumptions or the claims process. I am a concerned citizen and insurance agent that has to explain to consumers why their premiums have skyrocketed.

The facts suggest we as a state have done an excellent job keeping us at the 5th lowest cost for AUTO insurance nationwide (Bankrate 11/9/2023), and now 40% below the national average for homeowners insurance premiums (Bankrate June 1, 2024) improved from only 34% earlier in the year despite increases here in WA.  
Often unaware of the national scene or rankings our insured  are seeing increases of 10%, 30%, 50% and in the case of rural fire districts upwards of over 100% increases if the Washington Survey and Ratings Board (WSRB) have compelling reasons to change a protection class town code to a 8 or 9, (on scale of 1-10).  A rating of a 9 or 10 is in many underwriting circles I am told, that they are considered uninsurable from a risk perspective. Some carriers non-renew a customer while some carriers may be dramatically increasing the premiums to do the right thing for the consumer to remain insured.

The WSRB is diligently and independently evaluating fire districts, their chiefs, staff, equipment and resources constantly to make these critical determinations. If levies are not approved or the pool of dollars is simply renewed it does not necessarily allow the purchase of a new ladder truck to replace a 20-year-old version that is now 4 times more expensive. The Fire District leadership must manage their needs based on the resources they receive. Ultimately the homeowners determine those dollars at the ballot box.

Lastly, I will provide this auto example. I had an insured with a 2014 Honda Civic that he purchased specifically as an UBER vehicle for $11,000 sometime in 2022. During the Jan 2024 snowstorm he suffered damage after colliding with the safety cable on I-5 between Blaine and Bellingham despite the weather determined to attend a doctor's appointment to view some not so pleasant test results. His passenger rear quarter panel was heavily damaged. He brought the car to my office after the doctor's appointment on his way back home. The rear doors both opened and closed as did the trunk without sticking. Not being an auto repair expert, I sent him to the same shop that provided the labor cost info to me today. They estimated the repair to be $9,500.

A third party relied on by the insurance company determined that the vehicle would be totaled based on the cost verse value of the vehicle and offered some $10,500 for its totality. My customer was happy but would need a replacement vehicle.  Lucky for him we had suggested before the accident that he consider the AUTO REPLACEMENT ENDORSEMENT, (less $20 per policy period), which provided a check amount over $14,000 since that was the actual retail prices for what our company found to be available in the marketplace. Naturally, as so many vehicles that are not allowed to be repaired results in less inventory supply for the demand as those branded titles do not have many options after a sale of finding insurance. There can be great difficulty in securing even the basic third-party liability requirements of our state at that point.

If the NAIC or the individual states allowed for the evaluation of repairs to reduce labor costs this would allow more vehicles to be repaired without compromising the safety standards or structural integrity. This may also reduce the number of vehicles being scrapped for what seems like no reason other than a line in the sand that exists requiring them to be totaled based on a value being currently exceeded.

Such an accommodation may translate to more body shops getting more work rather than less. Used car retailers having more inventory at lower prices is a possible benefit. Finally, consumer premiums may find relief as inflated repair cost pressure decreases.

Maybe we will get some change that is positive if more people speak up?