Some to pay less for car insurance
06-09-2005, 12:01 PM
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Some to pay less for car insurance
June 8, 2005, 9:36PM
Some to pay less for car insurance
Higher-risk drivers will be getting a break
By PURVA PATEL
Copyright 2005 Houston Chronicle
Thousands of drivers covered through the state's auto insurer of last resort will see their rates drop in September.
The number of drivers covered through the Texas Automobile Insurance Plan Association is also near record lows, signaling the auto insurance market may be heating up as a result of reforms passed two years ago.
"It's good news for policyholders and for auto insurance customers in general because the voluntary market seems to be highly competitive," said Jerry Johns, a spokesman for the association.
Policyholders will see their rates fall an average 5.3 percent as their policies come up for renewal. Changes vary by county, and the cut doesn't apply to commercial vehicles.
The order issued by the Texas Department of Insurance comes despite the association's request for a decrease of less than half a percent and the Office of Public Insurance Counsel's suggestion that the rates be slashed 29.8 percent.
The association raised rates an average 27.7 percent last year.
Also known as the "assigned auto insurance market," the association places drivers who can't find companies to voluntarily insure them. Most drivers assigned to insurance companies through the association are considered high risk because of poor driving records or high claims rates.
The association assigns drivers to companies that provide coverage at the rates the department approves, although the rates are usually above those in the standard market.
If too many drivers seek coverage through the association, insurers forced to take on the riskier policies may have to raise rates for everyone else to cover losses.
The association has also shrunk, meaning more companies are taking on policyholders in the regular market and even competing for them with new discounts and policy plans.
The number of assignments made by the association dropped to 47,434 in 2004 from 74,506 the year before, signaling the number of policyholders has also dropped.
No one tracks the number of association policyholders, although most are in Harris and Dallas counties.
"The drop is an indication the voluntary market is more competitive and that's something that we hope to see as regulators," said Jerry Hagins, a spokesman for the insurance department. "That's a good thing."
The state's largest auto insurer, State Farm, had about 16,300 association policies in force as of April 15, spokeswoman Sophie Harbert said. That's down from 26,000 last year. Allstate has about 4,500.
State lawmakers deregulated auto insurance in the 2003 session. But consumers are just starting to see the results because the new rules
Some to pay less for car insurance
Higher-risk drivers will be getting a break
By PURVA PATEL
Copyright 2005 Houston Chronicle
Thousands of drivers covered through the state's auto insurer of last resort will see their rates drop in September.
The number of drivers covered through the Texas Automobile Insurance Plan Association is also near record lows, signaling the auto insurance market may be heating up as a result of reforms passed two years ago.
"It's good news for policyholders and for auto insurance customers in general because the voluntary market seems to be highly competitive," said Jerry Johns, a spokesman for the association.
Policyholders will see their rates fall an average 5.3 percent as their policies come up for renewal. Changes vary by county, and the cut doesn't apply to commercial vehicles.
The order issued by the Texas Department of Insurance comes despite the association's request for a decrease of less than half a percent and the Office of Public Insurance Counsel's suggestion that the rates be slashed 29.8 percent.
The association raised rates an average 27.7 percent last year.
Also known as the "assigned auto insurance market," the association places drivers who can't find companies to voluntarily insure them. Most drivers assigned to insurance companies through the association are considered high risk because of poor driving records or high claims rates.
The association assigns drivers to companies that provide coverage at the rates the department approves, although the rates are usually above those in the standard market.
If too many drivers seek coverage through the association, insurers forced to take on the riskier policies may have to raise rates for everyone else to cover losses.
The association has also shrunk, meaning more companies are taking on policyholders in the regular market and even competing for them with new discounts and policy plans.
The number of assignments made by the association dropped to 47,434 in 2004 from 74,506 the year before, signaling the number of policyholders has also dropped.
No one tracks the number of association policyholders, although most are in Harris and Dallas counties.
"The drop is an indication the voluntary market is more competitive and that's something that we hope to see as regulators," said Jerry Hagins, a spokesman for the insurance department. "That's a good thing."
The state's largest auto insurer, State Farm, had about 16,300 association policies in force as of April 15, spokeswoman Sophie Harbert said. That's down from 26,000 last year. Allstate has about 4,500.
State lawmakers deregulated auto insurance in the 2003 session. But consumers are just starting to see the results because the new rules
06-10-2005, 10:49 AM
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Say, Nancy, do you know anythng about those new Allstate policies that are mentioned in the article? I got something in the mail last week but have lacked any kind of motiviation to research that up to now. All I know is that 15% higher premiums seem awfully pricy to me, and I doubt I'd get comparable value in return.
What's the industry buzz?
What's the industry buzz?
06-13-2005, 05:49 AM
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This is actually the first I've heard about it... 
No buzz around here as of yet.
BTW, saw in the paper today that they are installing red light cameras around houston ANYWAY - what's up with that??
No buzz around here as of yet.BTW, saw in the paper today that they are installing red light cameras around houston ANYWAY - what's up with that??
06-15-2005, 02:23 PM
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A Good Neighbor Gets Better
Good news for good drivers: State Farm Mutual Automobile Insurance is rethinking the way it prices policies. The nation's largest auto insurer is converting to the "tiered pricing" model adopted in the 1990s by its top competitors, Allstate and Progressive . Sophisticated data-mining techniques enable insurers to be much more precise about assessing the risks of individual drivers.
Allstate, for instance, used to have just three main pricing categories -- preferred, standard, and nonstandard. Now it has more than 300. Tiered pricing "improves the overall level of auto insurance profits and takes out the volatility" caused by pricing cycles, says Jay Gelb, an insurance analyst with Lehman Brothers.
Tiered pricing usually translates into lower coverage rates for the better drivers. That's one reason that State Farm has been losing ground to its competitors, as drivers shop around. The company wrote 39.5 million auto-insurance policies in 2004, down 200,000 from the year before. That marked a second year of decline for State Farm. No. 3 Progressive, meanwhile, increased the number of policies it wrote last year by 7%. Clearly, it was time for a tune-up at State Farm.
By Adrienne Carter
Good news for good drivers: State Farm Mutual Automobile Insurance is rethinking the way it prices policies. The nation's largest auto insurer is converting to the "tiered pricing" model adopted in the 1990s by its top competitors, Allstate and Progressive . Sophisticated data-mining techniques enable insurers to be much more precise about assessing the risks of individual drivers.
Allstate, for instance, used to have just three main pricing categories -- preferred, standard, and nonstandard. Now it has more than 300. Tiered pricing "improves the overall level of auto insurance profits and takes out the volatility" caused by pricing cycles, says Jay Gelb, an insurance analyst with Lehman Brothers.
Tiered pricing usually translates into lower coverage rates for the better drivers. That's one reason that State Farm has been losing ground to its competitors, as drivers shop around. The company wrote 39.5 million auto-insurance policies in 2004, down 200,000 from the year before. That marked a second year of decline for State Farm. No. 3 Progressive, meanwhile, increased the number of policies it wrote last year by 7%. Clearly, it was time for a tune-up at State Farm.
By Adrienne Carter
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