Lower auto insurance rates will save drivers millions

By Paul Ertelt

Capitol Bureau





ALBANY — Recent reductions in auto-insurance premiums will save New York drivers $360 million this year, according to the state Insurance Department. Three insurers, American International Group, Chubb and General Motors Acceptance Corp., are the latest to announce rate cuts.

State Insurance Superintendent Howard Mills credited the reductions to a state crackdown on insurance fraud and the streamlining of claims processing. AIG has agreed to cut its rates by an average of 4 percent, saving its 75,000 New York policyholders an estimated $6.3 million a a year. The rates go into effect July 5 for new customers and Sept. 3 for renewals. Chubb, with more than 26,000 auto policyholders, is cutting its rates by 4.8 percent beginning Dec. 12 for new business and Feb. 6 for renewals. That will mean total annual savings of $5.1 million. GMAC’s 62,000 auto policyholders will see an average premium cut of 6 percent no later than the third quarter of this year, for an estimated $8.5 million annual savings. The Insurance Department already had approved rate reductions for 16 auto insurers, including a 3 percent cut for Allstate, a 6 percent cut for GEICO and a 5 percent cut for State Farm. Those three insurers cover about 45 percent of New York’s 11 million drivers. In November, the Insurance Department wrote to the state’s largest auto-insurance carriers to point out that the loss ratio for the passenger market had dropped significantly since 2002. Then, insurers were setting aside 86 cents of every premium dollar to pay claims, but that figure had dropped to 61 cents on the dollar a year ago. Mike Barry, spokesman for the department, said an increase in the average age of drivers, a drop in the number of accidents and a decline in fraud helped reduce insurers’ costs. Investigations by the department’s Frauds Bureau led to a record 815 arrests in 2004. Also, the time an injured party has to file a claim and the time medical providers have to bill insurance companies were cut recently, reducing opportunities for fraud, Barry said.