PCI Challenges NY Decision Assumption that Higher Gas Prices Equals Lower Auto Claim Costs
The Property Casualty Insurers Association of America (PCI) appreciates the New York Insurance Department's openness in discussing the issues associated with high gas prices, fewer miles driven and insurance rates; however, we urge them not to draw overly broad conclusions based solely on assumptions.
“We are disappointed in the department’s decision to deny most of the recent requested rate increases based on an assumption that higher gas prices and less driving has led to a reduction in losses due to auto accidents,” said Paul Magaril, regional manager and counsel for PCI. “This is an assumption that is not supported by the facts. A PCI study on the issue shows that, while consumers may be temporarily driving less, repair costs continue to increase.”
A paper developed by PCI highlights statistics indicating that U.S. drivers are traveling fewer miles. However, our analysis of auto insurance claims in New York and across the country shows that while the number of claims reflecting vehicle damages has been reduced, it is more costly to repair vehicles today. In fact, average claim costs in New York have increased by nearly one-third since 2000. The increase in the average cost per claim is substantially greater than the decrease in claim frequency, which puts upward pressure on insurance rates.
“While we support insurers taking a look at data regarding miles driven, there are many factors that determine what a consumer will pay for their auto insurance,” said Magaril. “As a result, it is necessary to explore in detail the trends of all of the various factors that have an impact on auto insurance premiums that consumers pay. Setting fair and accurate rates are very important for consumers and they should not be based on overly simplistic assumptions that are not borne out by the facts.”
Source: Source: PCI Press Release | Published on October 16, 2008
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