Insurers Lowering Car Insurance Rates in Virginia

September 25, 2006

Some of the top auto insurers in the nation are reducing rates in Virginia.

The reasons range from high gas prices to more sophisticated technology with which companies can calculate the risks of insuring particular drivers. The effect of tougher drunken driving laws are also driving down rates, analysts said, and safer cars are limiting the human toll of accidents.

Higher gas costs have some drivers scaling back their trips, reducing the likelihood of wrecks and claims, said Etti Baranoff, an associate professor of insurance and finance at Virginia Commonwealth University in Richmond.

But companies are also better able to figure out who deserves a lower rate, said Robert Hartwig, chief economist for the industry-sponsored Insurance Information Institute. They’re using technology to take a look at things like age and model of the car driven, where the driver lives and whether they own a home.

Such technology is becoming vital in the industry, according to a report last month on the outlook for auto insurers by analysts at the brokerage and investment banking firm Stifel Nicolaus & Co.

Hartford Financial Services Group has devised a mix of auto-insurance packages for drivers with different needs.

Hartford used the more complex technology and is winning business from competitors while holding on to its existing customers, said Mitch Jawitz, vice president of product management in Hartford’s personal lines of insurance.

Whatever the reason, many motorists are paying less to insure their vehicle.

Last week, for instance, State Farm reduced its auto rates in Virginia by an average of 5 percent. State Farm is the largest insurer of personal automobiles in the country.

USAA, which insures 78,000 in Hampton Roads, will reduce rates for as much as 90 percent of customers who come up for renewal, according to a spokeswoman.

Virginia’s lowering rates represent a nationwide trend, as auto insurers cut rates to combat steady declines in the frequency and severity of claims filed by policyholders.

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