New York Superintendent of Insurance Gregory Serio on Tuesday announced the commencement of an immediate and broad-based review of auto insurance rates for private passenger vehicles in New York State.
Insurance companies representing more than 60 percent of the auto insurance market in New York have been directed to appear before the Department to review their rate structures in the face of significant declines in losses in the auto insurance market.
“Since 2002, there has been a dramatic decline in losses across the board in auto insurance in New York. We believe that this tremendous turn of events has been due to the aggressive fraud fighting that we have relentlessly pursued at Governor Pataki’s direction over the past three years and other regulatory changes that have been implemented. It is time for the companies to reevaluate their rate structures and loss experience and return to the people of New York the anti-fraud dividend that is the yield of this hard work,” Serio stated.
New York State’s overall loss ratio in the private passenger market stood at 0.86 for calendar year 2002, meaning that 86 cents out of every dollar collected in premiums had to be set aside to pay claims, according to industry data.
As of June 30, 2004, the overall loss ratio in New York State was 0.61, or 61 cents on the dollar. Moreover, this same report found that New York State’s average personal injury protection (PIP) losses per claim dropped to $6,229 as of June 30, 2004 from $8,489 per claim as of year-end 2002.
The Insurance Department plans to meet with representatives of the following companies within the next 30 days: Allstate, CNA, GEICO, Hartford, Liberty Mutual, Metropolitan, Nationwide, New York Central Mutual, One Beacon, Progressive, State Farm, Travelers and USAA. Progressive and State Farm have already implemented rate reductions in 2004.
“When I became Superintendent three years ago, Governor Pataki gave me a mandate and the support to attack the high cost of auto insurance in New York. Through his appointment of Attorney General Spitzer as the special prosecutor for auto insurance frauds, greater cooperation and collaboration of the Insurance Department’s Frauds Bureau with the police and district attorneys in fighting fraud on the local level, regulatory changes including the implementation of cost-cutting Regulations 68 and 83, we have achieved dramatic declines in the losses experienced by insurance companies,” Superintendent Serio said. “Now we owe it to the hard-working people of New York to share in this good news and in these accomplishments.” Regulations 68 and 83 govern the ways in which no-fault auto insurance claims are processed.
The review will include the auto insurance written for private passenger vehicles in the voluntary market as well as those policies written in the Assigned Risk Plan, also known as the New York Automobile Insurance Plan (NYAIP). The number of New Yorkers insured through NYAIP was approaching its four-year low as of Sept. 30, 2004. NYAIP policyholders statewide received a 2% rate premium decrease effective August 2004.