My social media has lit up this year with complaints about vehicle insurance.

It seems as if every military family who’s transferred to a new duty station has paid more money to insure the same autos and the same drivers. Even families who haven’t moved (yet) are unhappy when they renew their policies: more money for the same coverage. It’s not just geckos or good hands or eagles or good neighbors or mouthy mascots. Insurance seems to cost more no matter who’s selling it.

The trend is clear: everyone’s auto insurance premiums are rising across the industry. Many insurers are paying out more than they’re earning. They’re all trying to cut costs, but we’re going to see rising rates for a few more years.

You could shop around for the cheapest deals (again!), but this time it’s not going to be easy or happy. There are a few tactics you can apply to your insurance choices, and we’ll talk about those after diving into the problems.

First, let me establish some credibility. I’m not just re-writing press releases here, and this discussion came from months of patient persistence.

FTC disclosure: how bloggers get interviews

Last week I interviewed one of America’s top insurance execs. This is unusual.

I can hear the question now: “Hey, Nords, what do you get from USAA for these interviews?”

Nothing. I enjoy researching these topics, and USAA execs seem to enjoy discussing the questions.

How does one score an interview with a USAA senior exec?

• – Go to USAA conferences like Digital MilEx
• – Network with other attendees and USAA staff and ask a lot of insurance questions
• – Write a bunch of posts about insurance (and draft a book)
• – Earn a reputation for explaining complicated insurance topics with two-syllable words
• – Do social media with the USAA team at their Salute To Service sports events
• – Get an unexpected invitation to the Army-Navy game.

In other words, five years of showing up followed by an opportunity.

You may have noticed by now that I’m an insurance nerd. Despite this I’m usually able to hide it and engage in polite pop-culture discussions, but if someone brings up risks or probabilities then… there I go again.

Anyway last December I was at USAA’s brunch for the Army-Navy game in a very large room with a gigantic crowd of convivial military football fans. My daughter was with me, her spouse was joining us later, and we were talking interservice-rivalry trash hanging out with other blogger buddies. I was pretty sure nobody would want to discuss claim reserves or crash-avoidance tech. I just nodded politely at the chatter and tried not to shiver in the Baltimore winter.

Much to my surprise, Wayne Peacock approached me. I’ve talked with him at several USAA conferences over the last five years, and now he’s the President of their Property and Casualty Insurance Group. As we chatted, he said he wanted to analyze the industry’s recent challenges. Why, thank goodness!, er, I mean, sure, I could do that.

Unfortunately we were expected to participate in football-related socializing, and we had to shelve the insurance discussion for later. He’s been busier than usual over the last few months (grappling with rising costs) while I talked with other experts on the P&C team. I did my homework on the rest of the industry and their trends, and then last week Wayne and I nerded out on the topic.

The FTC wants me to let you know that no money changed hands and I was encouraged to ask Wayne anything. I’ve insured our cars with USAA for over 35 years, but we have no other USAA insurance or financial products. I own Berkshire Hathaway stock (the parent corporation of GEICO) but even their gecko discount didn’t beat USAA’s rates.

If you want to learn how to network with USAA, please contact me and I’ll help you get started.

Enough disclaimers. Let’s nerd out on insurance.

Vehicle insurance problems

Auto insurance has been heading into trouble for decades, but the trends just accelerated during the last few years.

Wayne said that it started in late 2014, yet it took a while for the insurers to compare notes and realize that this is an industry-wide problem. This is one of the worst P&C years that the industry has ever experienced. Vehicle insurance claims were so bad in 2015 that USAA paid out $103 for every $100 that they received in premiums— and they have some of the lowest operating expenses in the business. In 2016, net losses rose almost 18% and members’ auto policy dividends dropped over 46%.

Ironically, the biggest insurance “problem” is that injury rates are rising faster than deaths. Both are getting worse, but vehicles (and trauma centers) are keeping more people alive after the accident.  That costs more in medical treatment, rehabilitation, and disability.

Legislation has improved vehicle safety for decades, and that’s boosting our human survival rates. Unfortunately we’re footing the safety bill by paying more for the auto. If there’s an accident then the insurance companies are paying a lot more for the repairs, and that expense is gradually circling back to the drivers as higher premiums.

The best example is “crumple zones”. This Insurance Institute crash-test video is a stark demonstration of how today’s vehicles absorb more of the collision energy up front instead of transferring it to the passenger compartment. The 1959 Bel-Air would simply be hauled off to the shredder while the 2009 Malibu would still have some parts to contribute to the junkyard. At lower speeds, however, crumple zones still enthusiastically do their job (even at 5 MPH in the parking lot). That’s a lot of internal damage, and it’s much more likely that your vehicle will need extensive repairs or even be declared a total loss.

Fuel-economy legislation and auto manufacturers are hurting insurers, too, because today’s frames and bodies use exotic mixes of aluminum, carbon fiber, and lots of plastic. The result is lightweight transportation and higher average gas mileage— until something goes wrong.

Wayne mentioned a recent USAA claim on a Ford F150, one of America’s most widely sold pickup trucks. Older models have steel wheel wells and beds, so if a tire blows out then the damage is limited to the tire and the wheel. Modern F150s have aluminum wheel wells and beds where a steel-belted radial tire can hurt a lot more. Wayne said that a newer F150’s blown rear tire sent spinning steel belts of shredding destruction through the entire wheel well, and then chewed up the truck bed all the way to the back bumper. Who wants to pay thousands of dollars to repair a tire blowout?!?

Labor costs are rising almost as fast as materials. Today’s bumpers and fenders are filled with electronics for backup cameras, proximity sensors, and computer controls. Vehicle repairs now involve more college-educated technicians than wrench-turning mechanics, and the diagnosis alone can be hundreds of dollars.

Enough about the vehicles; you get the idea. Now let’s talk about the drivers.

Driver insurance problems

The Great Recession was a good time for vehicle insurers, although admittedly only for those insurance employees who kept their jobs.

The national Cash For Clunkers program cleared a lot of junk off the highways, and unemployment “excused” more drivers from the rush-hour commutes. Oil prices were screaming over $140/barrel and seemed sure to hit $200 any day, which caused even more employed drivers to opt for public transport, carpools, and bicycles. Sure, unemployed drivers were canceling their policies, but claims expenses were dropping a lot faster than premium income.

Compare that era to the current booming economy and collapsing oil prices. The result is more cars on the road driving even more miles. It’s risen steadily for more than two years. Today more people are having still more accidents while driving yet still even more miles.

There’s a new and very disturbing trend among these rising numbers: distracted driving. More drivers are “visibly manipulating handheld devices” than ever before and the numbers are still rising. Wayne says that USAA’s fastest-growing category of accidents involves a vehicle drifting across the centerline and causing a collision without the brakes even being applied. Too many drivers are tweaking dashboard menus and videos, squinting at maps on their smartphones, or ambushed by texts making urgent noises while displaying their content in small fonts.

Just taking your eyes off the road for five seconds at 55 MPH is the equivalent of driving down a football field with your eyes closed. And I’m pretty sure you Mainland drivers are all moving faster than 55 MPH.

The cost of the problem (and the price we pay)

Adding up all of these issues during the last 800 words:

The National Safety Council estimates that the cost of deaths, injuries and property damage attributed to crashes in 2016 totaled $432.5 billion, up 12 percent from 2015.

That’s nearly $1350 per year for every person in America, licensed or not. I don’t know about your vehicle insurance rates, but I’m paying less than $150 per year for mine. The crash expenses are not affordable, let alone sustainable.

All right, expenses are rising. Now what?

As grim as the situation may seem, you can change your behavior to control your insurance expenses. Wayne has a number of constructive suggestions with USAA initiatives, but first let me jump on my podium for a personal polemic.

Millennials are now America’s largest age group, and they’ve already found the solution: drive less, and maybe don’t drive at all. Even though Millennials put themselves on report for the worst driver behavior, the Millennials and Gen Z have the lowest percentage of drivers.

Every reader of the Mr. Money Mustache blog & forum just coughed out a “Well, duh.”

Boomers and GenXers will be the drivers who bear the brunt of auto insurance costs. Better download that Uber app.

I’m not simply suggesting that you should drag your beach cruiser out of the garage and… well… actually I am suggesting exactly that. (Perhaps a modern mountain bike, bought used via Craigslist.) We could all stand to walk a little more, too, and live closer to things instead of expanding our suburban sprawl. Maybe we should plan our errands better for shorter trips, and do more online shopping. Or maybe just buy less stuff altogether.

Yeah, I know. “Nice try, Nords.” Hills. Weather. Sweat. Blisters. Aching knees. Work schedules. Shower facilities. Kid safety. Busy families. Too many errands, not enough time.

Commuting expenses are among the largest obstacles to financial independence. (It’s not the $5 latté.) The sooner you optimize those solutions then the faster you’ll boost your savings rate and reach your financial freedom.

All right, I’m done preaching. Let’s bring Wayne back in for more “practical” solutions. But remember, the less you drive then the less you pay… and not just for insurance.

Insurance solutions

The first answer is fixing the insurance system. Wayne says that U.S. insurers have to deal with 54 different state & territorial jurisdictions just to set up the rulebook. (USAA also covers military drivers in dozens of foreign countries.) Some states allow setting premiums by demographics (especially age) and experience while a few insist on charging only by driving record. The minimum requirements vary by state, not by the local cost of living or population density (or the number of Ferraris per square mile).

The biggest barrier to running an insurance business is figuring out the rules. The biggest administrative impact on reducing rates would be a national standard based on the driver’s record, their type of vehicle, and the number of miles they drive.

I’m not holding my breath for a national standard, but Wayne is now in a position of considerable influence to help the industry update the government rules. USAA has already helped do this with life insurance, and the vehicle insurance problems are even worse.

Next, USAA is working on repairing the repairs. Wayne admits that this is the hardest piece of the puzzle but it has the greatest potential for savings. One of the most vocal customer insurance complaints (even at USAA) is the lengthy, frustrating, and expensive repair process. Wayne says that USAA has to keep insisting on exceptional quality service and “get it right”. They’re constantly working with different repair businesses on better ways to restore vehicles to their original resale value.

USAA (and the entire insurance industry) is very interested in repair tech. Ford is experimenting with 3D printed parts, but I’m even more interested in DIY repairs. Imagine if you could print out those annoying plastic trim pieces in exactly the original shape and color instead of searching all over the Internet for a supplier with the right stock.

The industry’s other solution to repairs is: no repairs. In more cases than ever, it’s cheaper to declare the vehicle a total loss and reimburse the owner.

Easiest claim filing ever. Click on the image.

Totaling is a controversial and emotional practice for many owners who insist that they’re not getting the full resale value. If you’re in that situation then I’d encourage you to hire your own claims adjuster to negotiate with your insurer, and see whether it’s worth the expense. Personally, I’d recommend accepting the insurer’s valuation and taking the money (with minimal hassle). You didn’t have to negotiate with a dealer, or list the vehicle for sale, or handle all the sketchy wannabe buyers and their dubious offers.

Speaking of the claims process, USAA is still streamlining it. Today after an accident you can take smartphone photos of your vehicle damage, upload them when you file a claim on the app, and maybe even have payment by the time you get home. Our Ohana Nords hit & run was nearly two years ago, and filing an accident report with the USAA app took less than 10 minutes. It took an hour for our local police to do the same paperwork, and I mean literal paperwork. I had to scan the police report to upload it to USAA’s website.

Wayne says that USAA is also pushing other hardware solutions. They’re heavily promoting crash-avoidance technology to reduce accident rates and deaths (and incidentally avoid the entire repair process). Auto manufacturers are implementing these new systems faster than they rolled out airbags: it’s the biggest improvement in 20 years for the biggest potential impact.

While crash avoidance is becoming mainstream, USAA is also working on telematics and a smartphone pilot for assessing your driver behavior. Everyone thinks they’re an above-average driver, but collecting your own data will reduce your delusions.

Finally, Wayne pointed out that insurance is just one aspect of the total expense of ownership. The less you spend on the car (let alone the insurance), then the lower the financial burden of driving. For starters, USAA’s Auto Circle is now three years better than ever. It begins with their new-car buying service, where over a million USAA members have saved more than $2 billion over retail price. It has a powerful search engine to help you find the vehicle you need (not just your fantasy ride) and it can quote your insurance expenses before you buy.

They’ve greatly expanded their used-car buying service. You can let USAA work out the price with one of their certified dealers, or you can sell your own vehicle to the dealer with minimal haggling. I’m not a fan of financing new cars when you can save up the cash for a used one, but USAA is also happy to lend you the money. They’re a tad more understanding when their military members take their cars overseas, even if the loan isn’t paid off.

Finally, Wayne pointed out that most drivers choose their insurance by price– but they can’t tell whether that’s worth the cost savings until they need customer service. Before you go for the cheap policy, check customer satisfaction ratings and consider how USAA can support the unique aspects of military service.

But what can I do now?

Maybe that last section was good news for car buyers, but how else can you control your rising insurance rates? What if your premiums are going up despite having no accidents or tickets?

The most important action you can take is talking with a member service rep. Make sure they have the right info on your vehicle, and then check your policy details. Safety features? Anti-theft gear? Collision avoidance systems?

How much vehicle do you need? Are you really willing to work that many additional years of your life energy to have the biggest and most powerful pickup in the parking lot? Or could you stop competing with the Joneses and use an old minivan or sedan as merely safe family transport?

If you’re stationed in a new location, do you still need all of your old coverage? Roadside assistance? Towing? Rental car replacement?

How’s your neighborhood? Do you still need maximum coverage for property damage if you’re among cornfields instead of downtown? Is your vehicle parked indoors or on the street? How’s the winter weather?

Can you consolidate all of your policies with the same company for a bulk discount on home, personal property, auto, liability, and life insurance?

What about collision and comprehensive insurance? One thumbrule claims that when the premium is 10% of the vehicle’s resale value then you should drop them both. My spouse and I only buy used vehicles over five years old– and preferably with a few dings & scratches. We like lower prices instead of the cosmetics and we haven’t carried collision or comprehensive for over three decades. The compounded savings add up to a small fleet of good used cars– and the investments accelerated our financial independence.

If you must carry those two types of insurance, then what about your deductibles? How much could you save by raising them, and (here’s the important part) how long would that savings take to rebuild your vehicle replacement fund?

Do you still need a vehicle for every single driver in your household? This is especially important for families with teen drivers. If you have more drivers than cars then you may get an “occasional driver” discount. By the way, those young adults can enjoy lower insurance rates if they take driver education training and maintain good grades.

Now that our daughter has left the nest, I’m still trying to level up to the status of one-car family. These days we only need 1.1 vehicles (with a roof rack for longboards), so our second car does most of its duty as a spare-parts locker and a laundry rack. Ride-sharing is widespread on our little island, and maybe we can spend less on chauffeurs than we spend on insurance premiums.

After the hit&run, we didn’t fix the dings.

What’s your claim history? If you have a record of claiming fender-benders then your rates will magically elevate. Insurers share a national database of claims history, too, so you can’t avoid this expense by jumping to a different company. You’ll enjoy a brief fling with them before they update your history and boost your premiums at renewal time.

In fact, if insurers are prone to totaling a vehicle after an accident then maybe you don’t want to file a claim at all. You’d have to report the accident to your insurer (especially if you’re not at fault) but you don’t have to repair the vehicle to showroom condition. Once you’ve had the vehicle checked for safe operation then you could pay out of pocket for essential repairs (especially if you have a high deductible) or do your own cosmetic repair.

Finally, focus on the total cost of ownership. If you’re buying quality used cars and driving them for 15-20 years then your insurance premiums will flatten out. Stop paying for the latest & greatest, and put your values in your investments instead of in your transport.

Have your premiums jumped up this year? How are you controlling them?