NY Regulator to Insurers: Before Hiking Raise Rates, Consider High Gas Prices, Americans Driving Less
New York's insurance regulator, Eric Dinallo, is telling auto insurers looking for state approval for rate increases to first consider that Americans are driving less for the first time since 1980, making the roads safer.
In response to the order, Geico, which collects about 20 percent of the state's $10 billion in annual auto premiums, agreed to forgo pending increases for most of its New York customers and reduce requested rate hikes for others, state insurance officials said. Additionally, all insurers are now required to submit additional information to justify asking for higher rates as near-record gas prices curtail driving, Dinallo said.
"It's almost irrefutably logical that if gas prices reach a certain price, there's going to be less driving,'' Dinallo said in an interview. "Less driving is generally going to mean fewer accidents. It should translate into a decrease or a blunting of a price increase for insurers.''
Insurers including Travelers Cos. and Hartford Financial Services Group Inc. have said that rising unemployment and gasoline prices may have contributed to a drop in accidents in the second quarter. Americans drove about 2.4 percent fewer miles during the first five months of 2008 than in the year-earlier period, according to the Federal Highway Administration in Washington. Driving began decreasing last year.
"People are going through adjustments in their driving behavior,'' said Ramani Ayer, Hartford's chief executive officer, in an interview last week. "For the quarter, we definitely did see a decline in frequency, and we believe that was related somewhat to miles driven.''
Published on August 7, 2008
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