Auto Insurance Policyholders Benefit From Highly Competitive Markets: I.I.I.

January 29, 2013

Highly competitive auto insurance marketplaces are the key to making coverage available and affordable for all drivers, according to the Insurance Information Institute (I.I.I.).

“Auto insurance provides important, cost-effective financial protection to millions of Americans, and most drivers have dozens of auto insurers constantly competing for their business,” said Dr. Steven Weisbart, a senior vice president and the I.I.I.’s chief economist. “The price is risk-based, and always will be.”

The I.I.I. pointed out that the National Association of Insurance Commissioners (NAIC) found that the typical U.S. motorist had seen his or her annual auto insurance expenditures drop to $791.22 in 2010, more than 3 percent less than they were paying in 2006 ($817.99), according to the NAIC’s 2009/2010 Auto Insurance Database Report.

Auto insurance policyholders also have a degree of control over the price they pay for coverage because the premium is determined in part by their driving record, the type of car they drive and the miles they drive each year. These rate-setting variables were downplayed in an analysis released today by the Consumer Federation of America (CFA).

In addition, the I.I.I. noted that many consumers are volunteering to have telematic devices, which monitor miles driven, placed in their vehicles. These usage-based programs, also known as Pay-As-You-Drive (PAYD) policies, give drivers a financial incentive to drive less and, depending on the information that is monitored, to drive more carefully.

State insurance regulators already review and approve the various rating criteria (e.g., a driver’s age, gender and, in some instances, credit-based insurance scores, and education and occupation) auto insurers are allowed to employ when pricing a prospective or current policyholder’s policy. The mandatory minimum liability coverages a driver must purchase varies from state to state.

“As anyone who watches television commercials knows, auto insurance coverage is widely available in every U.S. state,” said Dr. Weisbart. “And competitive marketplaces drive down prices. Drivers should shop around if they feel as though their current auto insurer is not meeting their needs, or is charging too high a price.”

Source: I.I.I.

Was this article valuable?

Here are more articles you may enjoy.