Auto-insurance costs on the rise in Arizona

State has 13th-highest prices in U.S.



Mary Jo Pitzl

The Arizona Republic

Oct. 17, 2005 12:00 AM



High gas prices might not be the only thing cramping motorists' driving budgets: Auto-insurance costs in Arizona are on the rise and remain on the high side nationally.



The average rate has gone up 16.6 percent in Arizona in the latest five-year measurement. But there is some good news: The increase is less than the national average.



Campaigns to cut red-light running, slow speeders and cut drunken driving are paying off, and the industry remains very competitive, with more than 270 firms licensed to write auto policies in Arizona.



"We're doing some things right," said James Frederikson, executive director of the Arizona Insurance Information Association. "Number 1, people are doing a better job of driving."



But while overall collisions have dropped, severe collisions still exceed the national average and contribute to higher auto premiums. And Arizona's auto-theft rate remains sky-high, 136 percent above the national average.



These factors contributed to the average six-month Arizona auto premium of $920.38, the 13th-highest cost in the United States as measured in 2003 by the National Association of Insurance Commissioners. From 1999 to 2003, the latest year for which data are available, commission statistics show Arizona costs rose 16.6 percent, below the national average of 19.9 percent.



"Arizona is a very competitive auto-insurance market," said LuWanna Nielsen, a spokeswoman for State Farm Insurance, which claims the largest share of the Arizona market, at 17 percent.



This summer, State Farm cut the base rate that it uses to calculate prices by 4.6 percent, Nielsen said. That rate is now 11.3 percent lower than it was nine years ago, she said, although policyholders might not reap the same amount of benefit depending on their driving records, amounts of deductible and other variables.



Nielsen and other industry observers point to several improving trends to explain the moderation in insurance price increases.



Crashes dropped 2.5 percent from 2002 to 2003, according to the latest data Frederikson has analyzed.



Fewer of those crashes are happening on city streets - Frederikson credits red-light cameras, photo radar and police enforcement - but the flip side is that more are happening on the speedier freeways, often involving up to a half-dozen vehicles, he said. Forty-six percent of those collisions are rear-end accidents.



"That is speed and driver-inattention issues," he said. "Or tailgating."



It's those driving conditions that help keep Arizona in the upper tier of states when it comes to auto-insurance costs.



Arizona has hovered near the same ranking for years, said Erin Klug, spokeswoman for the Arizona Department of Insurance.



"We're between 10th and 15th, and have been for the 16 years I've been doing insurance," Klug said.



Speeding drivers typically cause more severe collisions, driving up the cost of medical payments and repairs. Arizona insurers pay $563 more than the national average to cover medical costs due to collisions, Frederikson said. And the state has a higher rate of people claiming to be injured in an accident: 19.5 percent greater than the national average, he said.



Frederikson said he suspects that's because Arizonans also like to hire attorneys to represent them in collision claims: 42 percent of Arizonans get a lawyer to represent them, compared with 24 percent nationally.



To help keep rates down, he advises: Keep off the freeways, and "if you're not injured, don't claim to be injured."



Comparison shopping also helps, since the competition between insurance companies produces lots of choice, industry analysts say.



The Department of Insurance counsels Arizonans to get a variety of quotes, and the agency's semiannual survey comparing premium prices shows why: Within the quotes gathered for 2005, state insurance officials reported huge gaps between the lowest and highest quotes for hypothetical drivers.



For example, a married, middle-aged couple with clean driving records and a 2003 Ford Explorer and a 2005 Ford Taurus in the driveway could face prices in 2005 that are 57 percent to 812 percent greater than five years ago, the survey shows.



But many drivers stay with a company they trust, or can't be bothered to shop every six months, when policies come up for renewal.



Sometimes they get lucky.



Manuel Franco said he saved $300 on his insurance when AAA, which provides his auto insurance, switched to another carrier. If AAA hadn't made the switch, the Avondale resident said he doubted he would have done so on his own.



"I've been with AAA so long, I'm just spoiled," he said. "I can't complain."