California Insurance Commissioner John Garamendi, standing with Automobile Club of Southern California (Auto Club) President and CEO Thomas McKernan, announced his approval on Friday of Auto Club’s filing to reduce its insurance affiliate’s policy premiums by five percent.
The filing, officially made by the Interinsurance Exchange of the Auto Club, was based on a reduction in the number of bodily injury, property damage and collision claims. It is the first auto insurance rate decrease submitted by a major auto insurer after several years of steady rate increases within the industry. The rate reduction, effective Aug. 1, 2004, would affect approximately 90 percent of Auto Club’s policyholders.
“I commend Auto Club for stepping up to the plate and passing savings along to its policyholders,” said Garamendi. “That one of the largest auto insurers in California and the nation can operate profitably enough to reduce its members’ premiums is good news for California insurance consumers.”
Auto Club had previously received approval for and implemented eight rate reductions from 1993 through 1999, accumulating a total decrease of 27.4 percent. From 1993 through 2002, however, its net decrease was 19.5 percent. The newly approved rate decrease will reduce its rates by 23.5 percent over the past 11 years.
“With the claims experience of the third largest auto insurer in California showing that rates can come down, it stands to reason that other insurers in the state could be seeing similar trends in their claims data,” added Garamendi. “I hope my department will see more filings for rate decreases in the coming months.”
Auto Club, serving its members since 1900, has more than nine percent of the state’s written premium market share and is the largest affiliate of AAA.
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