Not So Fast Auto Insurers Say To Regulators
Auto insurers are moving quickly to caution regulators on putting too much emphasis on high energy prices and it’s effects on driving patterns.
Based on a new paper by the Property Casualty Insurers Association of America (PCI) policymakers and regulators should be cautious in isolating one factor such as the number of miles driven and then assume auto insurance premiums should be lower.
“While there is solid evidence that the high price of gas has reduced the number of miles driven, it would be a mistake to assume that this means there will be lower insurance claims reporting and as a result, lower insurance premiums for consumers,” said Paul Magaril, regional manager and counsel for PCI.
This is a little bit of spin control by auto insurers as state insurance regulators have considerably more power these days than in years past. You now see states like California and Florida strictly enforcing mandated rate reductions and carriers are finding it much more difficult to gain approval for rate increases.
Gasoline prices have started to fall somewhat recently, as oil has lost over $30 a barrel from it’s high in mid-July. Still with driving down across the country, we could see increased momentum toward a usage based pricing model.
Right now most insurance carriers have esoteric pricing models with most normal people having no clue on how they arrive at their premiums. Now unlike other factors, the amount people drive would more than likely have a direct correlation on the number of accidents that occur.
I don’t think it would be unreasonable to expect some sort of rate reduction if claims actually do decline.
