Insurance agent Robert Leary, founder and owner of Newport-based City by-the-sea Insurance LLC, helps consumers find suitable policies tailored to their personal circumstances. He has nothing to do with setting the amount of premiums.
These days, it’s an important distinction, particularly when he’s explaining his role in the auto insurance industry.
“Whether justified or not, insurance companies have bad reputations for raising rates,” he said.
While it’s no secret that auto insurance costs have spiked nationwide, the jump in Rhode Island has been particularly sharp, with the state experiencing double-digit increases for three consecutive years, according to insurance industry representatives.
Couched within the overall increase is the acceleration of pricing for younger drivers, impacting parents or caregivers who are adding teenagers to their existing insurance policies.
And rates for males are higher than females. Leary says a baseline assumption is a son will cost about $50 more per month. “A teenage boy has always been the most expensive thing you can do to an insurance policy,” he said.
According to the financial website MarketWatch, full coverage car insurance for teens in Rhode Island is now 206% more expensive than the national average. And a ValuePenguin analysis of Quadrant Information Services insurance rate data found that the annual premium for a married couple averages $2,587 but climbs $5,828 to $8,415 a year when adding a 16-year-old driver to the policy.
David Travers, a real estate agent and high school baseball coach from Middletown, added his teenage son Adam to his policy with AAA and saw his premium immediately jump 35%.
But in a family with two working parents in a suburban town where driving to practice and other engagements is a necessity, Travers’ hands were tied.
“It’s about what I expected because insurance companies gouge you for kids,” he said. “They know they can just jack prices up.”
Travers’ youngest son will soon be getting his license as well. He awaits another financial hit.
“It’s a rip-off for sure,” he said.
However, a wealth of data supports the industry’s assertion that younger equals higher risk.
According to Rhode Island KIDS COUNT Inc., the highest cause of death for teenagers between 2018 and 2022 (28%) was automobile accidents; 24% had been drinking and 57% were not wearing a seatbelt. A Centers for Disease Control and Prevention study found that 39% of high school drivers in 2019 admitted to texting or emailing while driving within the previous 30 days.
Another analysis by the R.I. Department of Health in 2017 assessing risky behaviors among Rhode Island high school students showed an estimated 12,593 admitted to riding in a car with a driver who had been drinking alcohol or smoking marijuana. More than half reported talking on the phone while driving and 48% reported texting, emailing, or using an app.
Industry experts say this higher likelihood of riskier behavior leading to accidents is a key factor in actuaries calculating insurance rates for teenagers, who are statistically more likely to engage in speedy or distracted driving. And this is truer for males, whose fatality crash rate is three times as high as females.
Drivers in the state pay higher rates for car insurance due to its large urban population, higher-than-average highway density and elevated uninsured motorist rates (17%), according to Leary and others in the industry.
Leary agrees the likelihood of accidents, theft and vandalism is higher in urban centers, increasing the likelihood of insurance claims. His wife had the tires stolen off her car while at work at Rhode Island Hospital, more than once. He now has a standard response for any customers on Aquidneck Island experiencing shock over the size of the premium.
“I remind them that Newport has the lowest car insurance rates in the state,” he said. “The farther you get away from Providence, the better your rates are.”
Bryant University mathematics professor Rick Gorvett called the confluence of factors “a perfect storm” in a university report about recent insurance rate hikes.
In addition to supply shortages causing price increases for new and used vehicles, there is also “social inflation,” the tendency of insurance losses to inflate faster than overall consumer inflation due to increased litigiousness and larger tort awards, he said.
Leary believes there is little state regulators can do to rein in pricing.
“These past few years, the consumer has lost a lot of choices because many companies have stopped selling in Rhode Island,” he said. “They argue they are not going to sell anymore to get approval. And less competition usually means higher prices. The larger companies don’t care if you cancel your policy because it gets you off their books. They are saying, ‘Pay or go away.’ ”
