In May 2023, Hyundai Motor and Kia Corp agreed to a consumer class-action lawsuit settlement worth $200 million, a result of the rampant car thefts of the Korean automakers' vehicles in the U.S, according to Reuters. The settlement covered approximately 9 million U.S. owners and included up to $145 million for out-of-pocket losses for consumers who had cars stolen.

A few months earlier, the Korean automakers had announced they were offering theft deterrent software upgrades to 8.3 million U.S. vehicles in an attempt to limit spiraling car thefts caused by the viral TikTok challenge, known as the Kia Challenge. Prior to this, the carmaker had provided stopgap solutions that included free steering wheel locks and anti-theft kits for Hyundai or Kia vehicles manufactured between 2011 and 2021. 

The settlement was the result of a series of unfortunate events that initially started in 2021 when TikTok videos started showing just how easy it was to steal some Hyundai and Kia vehicles built without push-button ignitions or an immobilizer that prevents the car from moving if a key fob is not detected.

 “I recall early on hearing reports from our claims teams, and we obviously saw the data on the claims reporting coming in," says Michael Grove, senior vice president, head of U.S. retail markets auto product state management, Liberty Mutual Insurance. “This is also when agents were talking to us about it in our agency councils."

In 2019, approximately 3,500 vehicles were stolen in Milwaukee, according to the Milwaukee Police Department, with Kias and Hyundai's making up only 6% of those stolen. By 2021, that number had increased to 10,500 cars stolen—an increase of approximately 200%—with Kias or Hyundais representing 67% of those stolen. The number of Kias and Hyundais stolen in Milwaukee had increased by more than 3,000% in two years.

The trend spread across the country through 2023 with increases in car thefts, spurred on by Kia and Hyundai thefts, primarily in cities such as Philadelphia, Seattle, Milwaukee, Atlanta and Chicago, according to Axios.

Both Kia and Hyundai vehicles experienced the highest theft rates in 2023, according to the National Insurance Crime Bureau (NICB), the insurance industry's association dedicated to preventing and prosecuting insurance crime and fraud, while overall car thefts across the U.S. are declining.

Carriers responded to what they were seeing. State Farm issued a prepared statement notifying agents and customers that it had “temporarily stopped accepting new customer applications in some states for certain model years and trim levels of Hyundai and Kia vehicles because theft losses for these vehicles have increased dramatically. This is a serious problem impacting our customers and the entire auto insurance industry."

Other carriers, including Progressive, Nationwide, Liberty Mutual, and The Hartford notified agents and customers of the elevated risks of theft and the potential for increases in premium rates.

“We provide insurance protection for these vehicles and partner with insurance agents to educate customers on these trends and how they can help prevent vehicle theft," says Casey Kempton, president, property & casualty personal lines, Nationwide.

Additionally, “Safeco was proactive in getting communications out to our agents about advising customers to contact the manufacturer and dealerships to get the software upgrades," Grove says. “It's an example of a partnership between agents hearing about it and letting us know, and vice versa."

Yet, while personal auto rates have continually increased in the post-COVID-19 years with rates increasing 15% in the first half of 2024, according to Insurify, the increase was due to factors that were affecting the entire auto industry, such as repair costs, increased frequency and severity of claims and elevated medical costs.

While Kia and Hyundai owners faced insurance challenges when some carriers stopped accepting new customer applications or non-renewing certain model years of Hyundai and Kia vehicles, data suggests that the viral challenge had only a slight effect on increasing rates. While car models impacted by the Kia Challenge saw a 55% increase in rates, similar vehicles saw a 51% increase in premium rates, according to Insurify.

The personal auto insurance industry is showing signs of turning the corner after years of rising premiums and market challenges. While AM Best gave the U.S. personal lines insurance segment a negative market outlook for most of 2024, in November, this outlook was changed to stable.

Olivia Overman is IA content editor.