New York drivers will pay almost $515 million less than what auto insurance companies were originally seeking to charge next year, said Governor David A. Paterson, announcing that auto insurance rates for New York drivers will increase by an average of less than 1 percent.
The announcement comes as part of Paterson’s call to make New York more affordable, and follows a directive issued by the New York State Insurance Department that required insurance companies to consider the impact of reduced driving due to higher gas prices before setting insurance rates.
As a result several insurers voluntarily reduced or withdrew their requested rate increases. Prior to this directive, this year’s average requested increase from New York regulated auto insurance providers had been 8 percent.
Forty-three companies – covering 75 percent of New York drivers – had rate filings pending on August 6, when the department required companies to demonstrate how they were factoring in reduced driving when setting new rates. As a result, many of the companies withdrew or dramatically reduced their filed increases. Additionally, insurance companies that failed to provide adequate support for their filing or failed to respond to the Insurance Department’s directive will not have their requested increases approved.
New York residents already pay approximately $10 billion annually in auto insurance premiums.
“It’s simply counterintuitive to increase rates by 8 percent when people are driving less,” Paterson said. “Because of higher gas prices, New Yorkers are driving less and having fewer accidents as a result. New York’s auto insurance rates are already the third highest in the nation, and if the original requests for rate increases had been approved, it would have cost New Yorkers more than $600 million. By working with these insurance providers, we have helped provide $515 million in badly needed relief for New Yorkers.”
On September 30, the U.S. Department of Transportation released new data showing that July marked the ninth straight month to see a decline in driving nationally. Since last November, Americans have driven 62.6 billion fewer miles than they did over the same period a year earlier – topping the previous peak decline in 1970’s of 49.3 billion miles. In June and July 2008, New Yorkers drove 907 million fewer miles than they did during the same period a year earlier.
“There is a clear trend toward driving less,” Superintendent Eric Dinallo said. “Since trends are an important factor in setting auto insurance rates, we would have been remiss had we gone ahead with business as usual. It is common sense: when gasoline prices are high, people drive less. When people drive less, they have fewer accidents and fewer claims. And the insurance rates should reflect that.”
Was this article valuable?
Here are more articles you may enjoy.