Recession has caused auto insurance rates to differ from one state to another. So far in the current year the median rate hike has been recorded as 2.4%. This is evident from the changes in rate filed by approximately 24 companies in the auto insurance industry. There is yet another reason for increase in the insurance rates in Georgia as well as the other states. This can be attributed to the anomalous behavior of the financial markets spurred by subprime mortgage crisis and other natural calamities like hurricanes etc.

According to John Oxedine, the Insurance Commissioner of Georgia , changes in auto insurance rates as well as homeowners’ insurance rates in Georgia have been comparatively modest as compared to the other states. It has been observed that auto insurance premium has been increasing significantly in other states at double digits. This holds true particularly for insurers regulated at state level. The states where rates have been increasing include Illinois , Florida and Texas . On the other hand, rates have dropped in Ohio and few other states. However, due to the ongoing recession and uncertainty prevailing in the financial markets, it is still very uncertain as to which direction the rates are heading for.

Quoting Michael Murray, working as a financial analyst at Insurance Services Office, “The situation at the moment is a little bit complicated because supply and demand are both moving”.

As per reports furnished by the National Association of Insurance Commissioners, auto insurance policyholders in Georgia shelled out more than the national average as far as auto insurance is concerned. Georgia ’s average premium was approximately USD$965 (2006) as compared to USD$937 nationally.

Experts are of the opinion that increases in cost of auto repairs could also be one of the reasons for the spike in insurance rates. A retrospective analysis of the yesteryears indicate that cost of auto insurance reached 29% in 1975, it increased to double digits during 1985 and 1986. The rate of inflation in case of auto insurance reached its highest in 2001 after the recession. However, the increase in rates was less dramatic then revolving around 5.6% and 8.8%.