Monday, August 27, 2007

AUTO INSURANCE RATES STABLE FOR MANY

Jolted by high gas prices this year, car owners are at least getting some insurance relief. Auto policies are basically flat or falling for many Americans.

This year, the cost of auto insurance on average will rise only 0.5% -- the smallest increase in six years, according to an estimate of the Insurance Information Institute out Monday. It predicts a 0.5% decline for auto rates next year, the first drop since 1999.

The projections are based on recent auto claims and other information, as well as the national report of auto insurance rates released last week by the National Association of Insurance Commissioners. In 2004, the latest data available, the average annual cost of auto insurance was $838 per vehicle.

Individual premiums vary widely. Bryant Jaggers of Aurora, Colo., saw a "pretty significant" drop in his rates this year. State Farm Insurance cut his premium for four cars by about $500.

A chief reason for tumbling rates is a decline in auto accidents, in part due to safer cars and roads. "We've had many technological innovations ... helping vehicles avoid an accident and helping reduce or eliminate injuries of the occupants," says Robert Hartwig, chief economist of the institute.

The decline in accident rates is also attributed to some states barring or restricting late-night driving by teenagers. Although such programs have been in place for a while, they're finally starting to have an impact on insurance rates, Hartwig says. Other factors affecting rates:

*New Jersey, for years one of the most expensive states for auto insurance, is allowing more firms to do business in the state. That's brought more price competition. "We had just a tight stranglehold of regulation," says Steven Goldman, commissioner of the New Jersey Department of Banking and Insurance.

*In September, California implemented a law that prohibits insurers from determining auto rates based on people's ZIP codes rather than on how safely they drive. Insurers have since filed for rate cuts totaling $1 billion, according to the California Department of Insurance.

*In New York, rates are dropping because of a state crackdown on auto fraud and abuse. In July, for example, the state indicted 17 people and three corporations on charges of operating an auto insurance fraud ring.

Some say the drop in auto rates is not steep enough. They note that the property and casualty industry had a profit of $15.1 billion in the first half of the year, according to the Risk and Insurance Management Society. "Rates should be down quite a bit more," says Robert Hunter, director of insurance at the Consumer Federation of America.

(c) USA TODAY

3 comments:

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Lin said...

Well said.

Tanith said...

Well said.