The New York State Insurance Department has approved an average 5.6 percent decrease in auto insurance premiums for drivers in New York’s Automobile Insurance Plan (AIP), also known as the assigned risk plan.
The new AIP rate schedule, which goes into effect on Jan. 15, 2006 for new business, and March 1, 2006 for renewal business, represents a cumulative dollar savings of approximately $28 million for AIP’s policyholders.
“The insurance department secured a record number of auto rate reductions for New Yorkers in 2005, saving drivers statewide more than $400 million,” said New York Superintendent of Insurance Howard Mills. “But our successful efforts to combat fraud have reached the point where they have now translated into rate reductions for drivers who have trouble securing coverage in the voluntary market.”
The New York AIP consists of policyholders who are unable to obtain insurance in the voluntary market, generally because they have poor driving records, little or no prior driving experience, or a high frequency of claims. Premiums charged in the New York AIP are determined according to a unified set of rates approved by the department, no matter which auto insurer actually issues the policy.
Enrollment in the AIP statewide stood at 196,620 as of Oct. 31, 2005, as compared to well over a million in the early 1990s. Mills said the reduction in assigned risk plan business demonstrates that the state’s market is competitive.
The 5.6 percent average rate reduction in 2006 for New York’s AIP policyholders, who usually pay higher premiums than those in the voluntary market because they are deemed a greater risk, comes at the end of a year in which the average New York driver realized auto insurance rate reductions of anywhere from 3 to 10 percent.
The department attributes this year’s auto rate reductions to increased efforts at combating fraud, which led to a record number of arrests, the willingness of more district attorneys to prosecute no-fault auto insurance fraud cases and a series of regulatory reforms.
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