Consumers across all income groups are spending less money on auto insurance, according to a new report from the Insurance Research Council (IRC).

“Trends in Auto Insurance Affordability” reports that consumers devoted a lower percentage of their income to auto insurance in 45 states from the 1990s to the 2000s, and 46 states from the 2000s to present.

Because measuring affordability is inherently subjective, “instead of gauging that, our report looks at what percentage of income is spent on auto insurance now, relative to how much was spent on auto insurance in the past,” explains Patrick Schmid, director of research at The Insurance Research Council. “What we’ve been seeing is a decreasing trend in the amount spent relative to income over time and across states.”

With the intent of measuring auto insurance affordability trends over time, the IRC report calculated an expenditure-to-income ratio using expenditure data from the National Association of Insurance Commissioners (NAIC) and the Bureau of Labor Statistics Consumer Expenditure Survey.

The IRC reports that state by state, consumers spend the largest percentage of their income on auto insurance in Louisiana (2.85%), Florida (2.45%) and New York (2.42%), and the lowest percentage in North Dakota (1.03%), Iowa (1.05%) and New Hampshire (1.06%). But according to both data sets, the average consumer spends 1.5-1.6% of their income on auto insurance in the U.S.—much lower figures than in previous decades.

What factors might be contributing to the decline? Here are five the IRC found to correlate with how much consumers spend on auto insurance in the U.S.:

Loss costs. Schmid says the “primary aspect” driving how much consumers spend on auto insurance is what the IRC calls the “injury generosity system” in a given state. In states with higher loss costs or more generous injury reward systems, where plaintiffs are rewarded more via claim settlements, consumers tend to spend a larger percentage of their income on auto insurance—and vice-versa, Schmid says.

Competition. Schmid also cites a correlation between the IRC’s measurement of auto insurance affordability and something called the Herfindahl Hirschman Index, which measures competition within a particular place. According to Schmid, the results indicate that generally speaking, the more competitive the auto insurance market in a given state, the less consumers spend on auto insurance.

Regulatory environment. The IRC reports that consumers spend the highest percentage of their income on auto insurance in states with prior-approval laws. Meanwhile, consumers spend the lowest percentages in no-file states. “It seems as though the more stringent your regulatory environment is in the state, the less affordable auto insurance is within that state,” Schmid says.

Uninsured/underinsured motorists. Although Schmid says more uninsured motorists in a state usually means less affordable auto insurance for everyone, another factor that might influence this correlation has nothing to do with the concept of affordability: underinsured motorists.

“Of course certain individuals may be purchasing more insurance and others are purchasing less,” Schmid says. “Underinsured motorist rates might be increasing, so people may be less insured than they once were.”

Unemployment. In states with lower levels of unemployment, “it seems to be more of an affordable insurance environment,” Schmid says. But is it really more affordable, or does a tougher economy simply force consumers to devote a lower percentage of their income to auto insurance?

“It could be the economy is such that it’s creating the less affordable environment, or it could work vice-versa,” Schmid says. “It’s not necessarily one or the other. There’s just a correlation between them.”

Considering both the Federal Insurance Office and NAIC are currently investigating auto insurance affordability, the report’s finding that “less is being spent in terms of income than once was is pretty important—there’s so much public interest in this issue,” Schmid says. “A lot of the research out there right now is really just relying on premium quotes, and the good thing about our data is we’re not. We’re also not coming up with a definition of what is affordable or what is not affordable. We’re simply monitoring trends over time.”

Jacquelyn Connelly is IA senior editor.