Who Benefits From Higher Gas Prices? Auto Insurers.
Drive less, Pay less
The article is generally about how insurance companies make a profit due to steeply increased price of gasoline. As the increasing cost of gasoline forces U.S. drivers to keep their cars in the garage, as a result, there is less chance for an accident.
It makes sense to less driving means fewer accidents, which will help boost auto insurer earnings. U.S. Department of Transportation report indicates that auto mileage dropped by 4.3% in March compared to the year ago month. As a matter of fact, the report won’t be news to auto insurers, because they have already seen the reduced accidents
The third- largest auto insurer company “Progressive” offers “drive less, pay less” campaign which encourage drivers’ less risky- driving habits.
However insurers get benefit from increased price of gas, still there is negative effect to the repair companies. Due to higher material cost, the cost of repairing vehicles also increased.
My opinion
One barrel crude oil costs $126.62 in the U.S market by the report of May 30, 2008 on the wall street journal. As we all know that crude oil price has increased steeply in recent few months. Gasoline as a basic cost of all goods and services, almost in each country it causes high inflation. In Mongolia due to increased price of raw material ( gasoline, wheat etc) and unstable government situation, inflation up to almost 30% . Therefore I thought that increasing price of gasoline only benefits to huge oil exporter countries like Saudi an Arabia, Emirate or any other big exporters and never imagine that insurance company or third part companies could be benefited. From this article I saw that agile marketers can find out any expected advantage or value even situation is tough.
But I read that oil price tends to decrease in second quarter. Or probably because of some government actions like embargo, international agreement on trade, oil could cost less. At that time people will drive more, and accident rate could be increased again.
The article is generally about how insurance companies make a profit due to steeply increased price of gasoline. As the increasing cost of gasoline forces U.S. drivers to keep their cars in the garage, as a result, there is less chance for an accident.
It makes sense to less driving means fewer accidents, which will help boost auto insurer earnings. U.S. Department of Transportation report indicates that auto mileage dropped by 4.3% in March compared to the year ago month. As a matter of fact, the report won’t be news to auto insurers, because they have already seen the reduced accidents
The third- largest auto insurer company “Progressive” offers “drive less, pay less” campaign which encourage drivers’ less risky- driving habits.
However insurers get benefit from increased price of gas, still there is negative effect to the repair companies. Due to higher material cost, the cost of repairing vehicles also increased.
My opinion
One barrel crude oil costs $126.62 in the U.S market by the report of May 30, 2008 on the wall street journal. As we all know that crude oil price has increased steeply in recent few months. Gasoline as a basic cost of all goods and services, almost in each country it causes high inflation. In Mongolia due to increased price of raw material ( gasoline, wheat etc) and unstable government situation, inflation up to almost 30% . Therefore I thought that increasing price of gasoline only benefits to huge oil exporter countries like Saudi an Arabia, Emirate or any other big exporters and never imagine that insurance company or third part companies could be benefited. From this article I saw that agile marketers can find out any expected advantage or value even situation is tough.
But I read that oil price tends to decrease in second quarter. Or probably because of some government actions like embargo, international agreement on trade, oil could cost less. At that time people will drive more, and accident rate could be increased again.
reference:
TItle: Who Benefits From Higher Gas Prices? Auto Insurers, by MarketBeat Staff
May30, 2008
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