The most recent summary of the Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics (BLS) reveals that car insurance costs have risen significantly more than the overall inflation rate. Investigations have discovered that these rising insurance costs are partially due to legal system abuses.
According to the CPI, auto insurance costs rose by 1.4% in January, resulting in a total auto insurance inflation rate of 20.6% for the 12-month period ending in January 2024. This marks one of the highest 12-month inflation rates among indexes reported in the CPI. The summary identified motor vehicle insurance as one of the "indexes with notable increases over the last year," along with shelter (+6%), recreation (+2.8%), and personal care (+5.3%). The overall inflation rate for the 12-month period ending in January 2024 stood at 3.1%.
In a report from the Insurance Information Institute, it was stated that legal system abuses are causing "social inflation," which results in higher costs for insurance policyholders. The report defines legal system abuse as practices used by plaintiff attorneys that increase the time and money required to settle insurance claims. According to this institute, four practices are contributing to legal system abuse in the U.S.: third-party litigation funding, attorneys spending billions on advertising campaigns to attract claimants with promises of profits, growing plaintiff attorney fees, and eroding caps on damages.
The BLS is a part of the Department of Labor, as stated on its website. It provides data related to labor economics and analyzes and publishes this data for use by government agencies, employers, and the general public.