I found this article from AAA that explains the changes in our citizens driving habits.

Americans are driving more, thanks to rising employment and cheaper gasoline. But that also means they’re getting into more accidents — and that’s leading to higher insurance rates.

Of course, it’s not just a matter of more people cruising the roads. Unsafe behavior also may be contributing to a national accident problem, according to research released by the AAA Foundation for Traffic Safety. A February report by the group found about 87 percent of drivers engaged in at least one risky behavior while behind the wheel within the past month, including using cell phones or not wearing seat belts.

“The number of accidents has gone up,” said Jim Lynch, chief actuary of the Insurance Information Institute, a trade group. “At the same time, the size of claims settlements has been rising as well, so the industry is kind of getting hit by a double whammy.”

The size of claims — which in industry lingo is called “claims severity” — is trending higher and affecting several auto insurance companies. Rising costs for medical care and auto repair are big drivers of increasing claims severity. The increasing price of auto parts contributes as well.

But critically, there are more personal auto claims as a result of Americans driving more miles. That trend, which is closely watched by industry analysts, can hurt the profitability of the insurance companies.

“If you look at companies such as Geico, last year in particular they reported much higher (personal claims) frequency than they had expected, and that eroded their profitability,” said Meyer Shields, a stock analyst at investment bank Keefe, Bruyette & Woods. “They are slowly building that back now, really through just higher insurance rates.”

“Motor vehicle insurance always seems to be above the normal cost of inflation. The numbers to the payouts are going up. Medical bills seem to be crazy … and the costs especially for bodily injury.” -Penny Gusner, consumer analyst,

The federal government last week released its auto insurance-related Consumer Price Index (CPI) monthly data — a proxy for policy rate activity — which showed prices rose 6 percent year-over-year in April. They were up 5.1 percent in February and March. April represented the largest year-over-year increase since October 2003, when motor vehicle insurance prices rose 7.2 percent.

“Motor vehicle insurance always seems to be above the normal cost of inflation,” said Penny Gusner, a consumer analyst at, an insurance marketplace. “The numbers to the payouts are going up. Medical bills seem to be crazy … and the costs especially for bodily injury.”

From 2005 to 2013, figures show the average cost per paid bodily injury liability claim increased 32 percent, from $11,738 to $15,506, according to the Insurance Research Council. In 2014 it had reached $16,600, up 7 percent over the 2013 average payout.

A threat from autonomous vehicles?

That said, future automobile safety improvements and the adoption of autonomous vehicles may reduce injuries and save lives, too. But vehicles that drive themselves may undercut the car insurance carriers.

A report last year from KPMG suggests autonomous vehicles being developed today by Google and others “may bring about the most significant change to the automobile insurance industry since its inception.” It predicts accident frequency per vehicle could drop 80 percent by 2040, when “the car stock will likely be replaced by or retrofitted with autonomous technology.” Also, it suggests that within 25 years, “the personal automobile insurance sector could shrink to less than 40 percent of its current size.”

“Insurers are well aware of emerging auto technology and the potential changes that could result in the insurance industry,” said Lynch, the insurance trade group official. “The changes will be gradual and insurers should be able to manage this change.”

For now, however, Lynch said personal car insurance carriers are likely to increase rates roughly “between 5 and 10 percent. The vast majority of them have been seeking an increase over the past year or two.”

In California, several major auto insurers also have requested or been approved for rate hikes this year, with most averaging roughly 7 percent. Also, premium increases of 10 percent or more have been going into effect in Florida in the past year.

Overall, the nation’s top 5 writers of personal auto insurance have a combined market share of about 54 percent, according to SNL Financial data. Privately held State Farm is the largest, with an 18.3 percent share. It’s followed by Berkshire Hathaway subsidiary Geico (11.4 percent), Allstate (6 percent), Progressive (8.8 percent) and USAA Insurance (5.3 percent). CNBC also reached out to Geico, State Farm and National General for comment but didn’t receive a response. A spokesman for Travelers and Progressive referred to transcripts with management comments made during earlier earnings or investor calls.

“Some have commented that they’re seeing higher (claims) frequency,” said Travelers Vice Chairman and CEO of Claims Doreen Spadorcia, according to a transcript of the company’s first-quarter earnings call. “Some have not commented. So we don’t feel like it’s this thing that’s just ripping through the industry. It’s affecting very specific companies.