Last October GEICO debunked rumors that it was no longer insuring the Tesla Cybertruck, calling them “completely made up.” A policyholder previously posted on X an alleged letter in which GEICO communicated non-renewal of a Cybertruck insurance policy based on underwriting guidelines.
However, when State Farm and others reduced writings of 2010-era Hyundai and Kia models beginning in 2023, this was more than a rumor — the insurers confirmed as much. Theft rates of those vehicles surged in late 2022 after TikTok videos illustrated how to start them without keys. Reports of non-renewals persisted into 2024. Several Hyundai and Kia vehicles (as well as Cybertrucks) join dozens of others on the New York Department of Financial Services’ “difficult to insure vehicle” list.
Relief started to come to beleaguered vehicle owners and their insurers in 2024. The Highway Loss Data Institute (HLDI) found Hyundai’s and Kia’s software updates significantly reduced thefts, which may lower rate pressure. Owners of stolen vehicles also benefited from a $145 million USD class action settlement in early 2024. Dozens of insurers signed onto their own pending class action against the automakers, and Allstate subsidiaries are litigating against Hyundai and Kia over other 2006 and later vehicles whose circuitry allegedly caused them to combust.
What this means for actuaries:
The insurance industry plays a critical role in making vehicles safe for travel and reliable. Automakers often boast when the Insurance Institute for Highway Safety selects their vehicles as Top Safety Picks. Actuaries in particular may be called upon to develop discounts for new safety features or right-size rates to what the HLDI (or perhaps even TikTok and X) indicates as vehicles’ current loss potential. The best way to prevent their models from being “difficult to insure” is for automakers to raise their safety game. The flurry of recent insurer-automaker litigation is a reminder for actuaries to consider subrogation potential in analyses.
Sources:
- https://www.cbsnews.com/news/state-farm-progressive-kia-hyundai-auto-insurance/?utm_source=chatgpt.com.
- https://www.insurancebusinessmag.com/us/news/auto-motor/is-geico-pulling-the-plug-on-tesla-cybertruck-insurance-508523.aspx.
- https://www.msn.com/en-us/autos/news/viral-post-about-geico-insurance-dropping-tesla-cybertruck-is-total-nonsense/ar-AA1rQbYV.
- https://www.cnn.com/2023/01/27/business/progressive-state-farm-hyundai-kia/index.html.
- https://www.insurancejournal.com/news/national/2024/08/09/787773.htm.
- https://www.cnn.com/2023/01/27/business/progressive-state-farm-hyundai-kia/index.html.
- https://finance.yahoo.com/news/serious-problem-minnesota-woman-car-110500746.html.
- https://www.dfs.ny.gov/consumers/auto_insurance/difficult-to-insure_vehicles.
- https://www.insurancejournal.com/news/national/2024/11/14/801130.htm.
- https://www.insurancejournal.com/news/national/2024/10/04/795868.htm.
- https://www.insurancejournal.com/news/national/2024/08/09/787773.htm.
- https://www.courtlistener.com/docket/66678516/in-re-kia-hyundai-vehicle-theft-litigation/.
- https://www.usatoday.com/story/money/2024/02/28/kia-theft-settlement-hyundai-owners/72775295007/.
