State Auto Insurance rates Down 11.3%

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Critics Question Timing of 4-Year Study’s Release

San Francisco Chronicle

Auto insurance rates have dropped an average of 11.3 percent in California during the past four years, Insurance Commissioner Chuck Quackenbush said yesterday.

Critics said the reductions have been less than what consumers deserved.

In a Los Angeles press conference, Quackenbush said California consumers have benefited from a vibrant auto insurance market that has put $1.5 billion back in their pockets through reduced premiums.

He credited competition and a crackdown on fraud for the reductions.

The timing of Quackenbush‘s announcement — one day before he is to appear before the Senate Insurance Committee — prompted critics to accuse him of political grandstanding.

“It’s a political maneuver intended to help him avoid tough questions on why rates are as high as they are,” said Doug Heller, spokesman for the Prop. 103 Enforcement Project in Santa Monica.

Heller said recent reductions have been inadequate, given that industry after-tax profits exceeded 20 percent last year.

“We’re overpaying for insurance and the insurance commissioner is proudly stating we should be happy because we’re not overpaying as much as before,” said Heller, whose group fought for Proposition 103, the 1989 measure that was to have rolled back auto rates by at least 20 percent.

There’s a difference of opinion about why rates are dropping.

Quackenbush credits competition for the reductions, pointing out that there are 120 more companies writing auto policies in California than when he took office four years ago.

But critics and industry representatives said it’s much more complicated than that.

A 1996 law, Proposition 213, prohibits drunken drivers and uninsured drivers from suing for pain and suffering. That’s reduced medical claims. There aren’t as many fatal accidents, either.

Also, “Baby Boomers — the biggest group of drivers — are middle aged now,” said Jerry Davies, spokesman for the Personal Insurance Federation in Sacramento, a group representing auto insurers. “They’re driving more safely and they’re driving bigger, safer cars.”

In addition, he said, auto thefts have dropped 12.2 percent since 1995, small children more often ride in car seats and 90 percent of adults use seat belts, up from 68 percent five years ago.

“All have played a part in reducing claims,” said Davies.

Although rate drops have averaged 11.3 percent, there have been wide variances among different carriers.

According to Quackenbush‘s statistics, rates in 1998 alone dropped 12.5 percent at USAA Group, 8.8 percent at Safeco, 8.5 percent at State Farm, 5.1 percent at Allstate, 6.85 at 20th Century, 4.46 at Mercury Group and 3.9 percent at the California State Automobile Association.

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