Connecticut Auto Insurance Rates head lower

Drop in accidents is one factor

PAM DAWKINS pdawkins@ctpost.com



Connecticut motorists are digging deep to fill their tanks, but those rising gas prices could mean smaller car insurance bills.

More expensive gas is one factor cited by several insurance companies when asked why some premiums are dropping.



Not all policyholders will see their rates fall — individual factors like driving records play a part in the price of Connecticut auto insurance — but one company said its rates will drop an average of 2.1 percent next month, while another said its rates are already down 3.8 percent.



"There have been improvements," said Rod Curran, who heads the underwriting department in Geico's regional office on Long Island, N.Y. Not only are cars safer, resulting in a drop in accidents and injuries, but higher gas prices generally mean fewer miles driven, which lowers the risk factor, Curran said.



"It's been a downward trend [nationally]," said Tony Diodatu, vice president in insurance rating and information agency A.M. Best's property casualty division.



Because the severity and frequency of accidents has been "at a very low point" for the past several years, Diodatu said, the amount insurers are paying out for losses declined. "The profitability of auto insurance companies has gotten better," he said.



In Connecticut, said Department of Transportation spokesman Chris Cooper, auto accident fatalities have declined for several reasons, which he described as improved engineering of roads, enforcement and education.



"I think the statistics would bear out it's [the three reasons] having the desired effect," he said.



In 2000, the state saw 34,447 accidents, resulting in 51,124 injuries, according to the DOT. By 2003, the last year for which full data is available, the numbers dropped to 30,948 accidents, with 44,955 injuries. Alcohol-involved accidents also dropped in that time frame, from 1,123 (with 1,698 injuries) to 948 (with 1,465 injuries). Fatalities also declined, from 343 in 2000 to 298 in 2003. On the theft end, State Police spokesman Sgt. J. Paul Vance said there's been a "slight decrease" in the numbers. Between 2001 and 2003, he said, motor vehicle thefts dropped from 12,412 to 11,340. He credits, in part, better technology protecting cars, as well as an auto theft task force that works with local police departments.



Diodatu, too, credits better enforcement of traffic laws, safer cars and, maybe, higher gas prices for part of the drop, but said it is also a result of more sophisticated pricing models.



"It's allowed them more flexibility to lower rates," Diodatu said, because the companies are able to support more gradations in pricing.



Connecticut is one of the more expensive states in which to insure a car, said Susan Cogswell, commissioner of the state Department of Insurance. The relative wealth of Connecticut residents means they tend to drive more expensive cars, she said, adding that the population density also plays a part in auto insurance rates. Other factors include the high cost of labor, which affects repair costs, and health care.



Insurance companies file base rates with the department, which, Cogswell said,



analyzes them to make sure they are not "excessive, inadequate or discriminatory." The companies — there are 125 actively writing auto insurance policies here — must also submit the rules that detail how they apply individual factors, such as driving record, credit score and geographical location, according to Cogswell. Connecticut law allows what is called "territorial rating," which means insurers can factor the car's geographic base into their charges.

So far this year, Cogswell said, rates overall are up 0.4 percent, but, she added, "We have seen, in general, a decrease in rates."



There is no average decline for Geico, Curran said, but its rates have been falling in Connecticut in the last year or two. Part of that is due to what he called "efficiency improvements" at the company — such as $25 rebates for some customers who pay online — but the company is "trying to be aggressive, to keep our rates down." According to Curran, Geico is the second-largest auto insurance writer in Connecticut, behind Allstate.



The Progressive Group of Insurance Cos., which has two insurance businesses selling policies in Connecticut — one through independent agencies, the other direct to customers — recently received approval to lower rates for coverage. The direct-to-customers business will drop collision coverage rates in mid-September for new business and in November for renewals, said spokeswoman Christy Cote, in response to e-mailed questions. The average reduction, she said, will be 6 percent for customers with collision coverage.



And customers of the company that sells through agents will see an average rate drop of 2.1 percent in September (for new business) and November (for renewals).



The two companies dropped rates by 2.1 percent and 1.6 percent, respectively, in 2004, Cote said.



On Aug. 1, State Farm announced an average rate reduction of 3.8 percent but, cautioned spokeswoman Michelle Hare, that doesn't apply to all customers. "Individual rate decreases are dependent on the type of coverage a policyholder carries, applicable discounts, type of vehicle insured ," she wrote in response to e-mailed questions.



State Farm, which Hare said has about 3 percent of the market in Connecticut, ranked 12th in Connecticut in a 2004 A.M. Best ranking.



When asked if the reductions are going on anywhere else, she wrote, "Rate reduction allows the company to provide a more competitive price for our product. Realistically, however, rate reductions will continue to vary by state."