Personal auto rates are moderating, according to consumer price index data released in October.

Brian Meredith, a Bank of America property-casualty insurance analyst, said in a note to investors that "as expected, and consistent with the general downward trends since rates peaked in 2002, personal auto insurance pricing is moderating."

October CPI data showed auto inflation rising at a 0.7 percent rate year over year, compared with a 1.3 percent rate the previous month and 2 percent in August.

Homeowners pricing also weakened in October with a 0.4 percent decline year over year, compared with the 7 percent peak rise in January of 2003.

"As loss cost trends exceed price increases, we believe we are entering a period of margin compression for all personal auto insurers," Mr. Meredith wrote.

As a result, he said, personal lines companies will maintain an underweight rating and will not meet the performance of the commercial line companies.

"We also believe that the benefit to loss frequency trends resulting from the oil cost spike that followed the hurricanes is temporary, and improvements in frequency should continue their long-term trend of slowing," Mr. Meredith wrote.

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Personal Auto Rates Moderating

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