US auto insurers are likely to raise premiums further to cover for rising inflation and worsening claims losses as pandemic curbs ease across the country, according to the Insurance Information Institute in New York.

The institute says personal auto premiums have already returned to pre-pandemic levels and anticipates more rises are in store as insurers are under pressure to do more to keep their product portfolios viable.

Insurers’ personal auto loss ratios fell briefly and sharply in 2020 but they have since climbed steadily to exceed pre-pandemic levels.

“With more drivers on the road and replacement parts costs continuing to climb, this loss trend is expected to continue,” the institute said.

“To remain viable, insurers have to set premiums at levels appropriate to the risks they cover.”

The institute says the auto insurance line is inching towards unprofitability as reckless-driving trends that emerged with the pandemic have continued, along with cost trends that predated covid.

It also says changes in auto insurance premium rates have not kept pace with general inflation, as measured by the consumer price index, and have been far outstripped by inflation for auto replacement part costs.

“If the trends established before and during the pandemic continue, so will upward pressure on rates,” the institute said.