Personal auto insurance rates appear set to increase at anaccelerated pace, according to one analyst firm, and insurers mayjust be waiting on the market leader to lead the charge.

In an industry update, Stifel Nicolaus notes that a 2012 Q2analysis shows that direct written premiums for auto insurers rosejust 2.5 percent, year-over-year. Stifel Nicolaus analystMeyer Shields, speaking to PC360, notes that the 2.5 percentincrease is relatively in line with increases seen since 2011'sthird quarter.

The slower rate of premium growth compared to other insurancelines, he says, is an indication of a healthy market that is notvolatile and does not see a lot of dramatic changes. However,Shields says loss costs are rising, and the recent trend of benigninflation “is starting to normalize.”

The Stifel Nicolaus analysis notes that market leader State Farmreported calendar year combined ratios of 105.3 and 123.3 in the2012 and 2011 second quarters respectively — results the firm callsunacceptable. “We think [State Farm] needs to raise rates to remainprofitable, which should pave the way for competitors to do thesame,” the analysis says.

The industry was helped by a drop in its direct loss ratio ofabout 140 basis points in the second quarter, but Stifel Nicolausattributes this mainly to “suppressed driving stemming fromstill-high gas prices and unemployment.”

As for individual insurers, Stifel Nicolaus figures show USAAInsurance Group, which insures only military personnel and theirfamilies, leading the way for percentage increases inyear-over-year direct written premium among the top-10 autoinsurers, ranked by total direct written premiums. USAA saw writtenpremiums increase by 8.6 percent. Berkshire Hathaway ranked secondwith a 7.8 percent year-over-year increase.

Market leader State Farm saw written premiums increase by 1.3percent, and second-ranked Allstate saw written premiums decline by0.3 percent. Allstate was joined in negative territory by Travelers(-4.2 percent) and American Family Mutual (-2.9 percent).

Others in the top-10 include Progressive (6.5 percent increasein year-over-year direct written premiums), Farmers Insurance Group(3 percent increase), and Liberty Mutual (6.3 percent increase),and Nationwide (2.8 percent increase).