USAA to cut car insurance rates in texas

One of the state's larger car insurers said Thursday it would cut auto insurance rates an average 12 percent, signaling the change in rules is having an effect.

USAA, which insures military members and their families, already cut rates an average 4.5 percent in February.

The insurer credited the reductions to lower operating costs and last year's insurance reform, which increased competition.

The average savings of $98 per policy for the company's 390,000 auto policyholders will vary by location.

The new rates go into effect Dec. 1, under the state's new file-and-use system that allows insurers to implement new rates upon filing them with the Texas Department of Insurance.

In another sign that auto insurance availability is growing, the Texas Automobile Insurance Plan Association reports 41,881 assignments through October of this year, compared to 74,506 assignments during 2003.

The term "assignments" refers to the number of times an insurance company was assigned to insure a driver who wasn't able to find coverage elsewhere.

Policies placed through the plan usually offer less coverage and cost more than policies sold in the voluntary market.

"This is a very clear indication that the private auto insurance market is functioning well and has the financial capacity to meet the demand for new customers," said Jerry Johns, a spokesman for the automobile insurance association.

Several insurers have already started to file new policies and forms with the Texas Department of Insurance in anticipation of the new file-and-use system, according to Philip Presley, chief property and casualty actuary at the department.

"They're going for tiered rating systems where, within a company, you may have three or four or five different rate levels," Presley said in an interview this week.

"And depending on credit and other factors, you get slotted into one," he added.

Consumers can expect new pricing plans and coverage plans in coming months asinsurers compete for business.

For example, Farmers Texas County Mutual recently increased its discount for policyholders with a Farmers home and auto policy by 5 percent and plans to apply the change to new policies on Dec. 1.

The insurer has 300,000 policyholders.