Insurance rates are through the roof – and you can blame AI

There’s a good chance you’ve been hit with insurance rate hikes — and it’s not just you. Within the past year, about a third of us have been hit with increases to the tune of 17%.

Insurance companies blame it on rising costs for car parts, replacement cards and all those expensive claims. 

They are raising rates to keep up with those pricey claims — all while turning a profit. And, surprising no one, they’re using data tracking and AI to make it all happen. 

Let’s get into what’s really going on and what you can do to cut costs.

A whole new world

Business Insider dove into the secretive world of the insurance industry — and it’s not pretty. Back in the day, your insurance policy was based on simple demographic data points. Think 36-year-old woman in Phoenix. That’s it.  

With more AI tech and data than ever at their fingertips, insurers now know exactly how much customers are willing to pay.

“Price optimization” feeds consumer data into an algorithm that spits out a personalized price for each customer. It’s based on how risky a person is to insure but also considers predicted profits they would deliver for as long as they’re a policyholder.

Insurance companies look at many data points, including if you’ve recently had your roof replaced and what you eat regularly. They can even check your social media posts and know if you’re a smoker.

What’s that got to do with how well you drive? Not much, to be honest. But it does have everything to do with making it harder to find a good deal.

Like they’re in the car with you

Although 68% of Americans oppose using an app that collects driving data, it hasn’t stopped insurance companies from forcing it on us.

If you’re a high-risk driver, your insurance company might make you use a tracking device to maintain coverage. It’s like a health insurer who mandates participation in a corporate wellness program. In both cases, these companies get access to a ton of data on you. 

Smart savings tips

There’s no clear way to beat your insurance company’s AI tracking measures. But these practical savings tips go a long way, even in what feels like an ever-evolving sci-fi movie:

• When shopping for new insurance, compare quotes from several providers to find the best deal. Some sites do it for you, like Gabi.
• Look at your current policy and drop unnecessary coverage to save money. For example, if you only drive locally, you might not need 24/7 roadside assistance.
• Take advantage of discounts. Many insurance companies offer savings for bundling homeowners or renters insurance with auto coverage.
• Raise your deductible to lower premium payments. Remember, this also means you’d pay more if you have to file a claim. Only do this if your budget can handle that.

Don’t forget to pass this story along to family and friends. They’ll thank you for it.