An insurance trade group said New York's insurance regulator iswrong to assume that reduced mileage by auto policyholderstranslates into lower claim costs.

The Property Casualty Insurers Association of America (PCI)statement came after New York Insurance Superintendent Eric Dinalloconvinced GEICO last Wednesday to withdraw a rate increase requestfor most of its auto insurance companies in the state.

Mr. Dinallo cited the impact of higher gas prices on the numberof miles New Yorkers drive. But PCI said there is not necessarilyan impact on claims because repairs cost more and frequency wastrending downward before gasoline costs spiked upward.

"We are encouraging the superintendent to not draw overly broadconclusions based solely on assumptions being drawn by consumergroups regarding the number of miles driven," said Paul Magaril,regional manager and counsel for PCI

The organization said in its statement that it has done a studyshowing public policymakers should be cautious in isolating onefactor such as the number of miles driven, and then concluding autoinsurance premiums should be reduced.

"While there is solid evidence that the high price of gas hasreduced the number of miles driven, it would be a mistake to assumethat this means there will be lower insurance claims reporting andas a result, lower insurance premiums for consumers," said Mr.Magaril.

PCI noted that Mr. Dinallo has told insurers they mustsupplement rate filings with a written analysis of how the effectsof the rising price of gas in New York are reflected in their ratelevel indications and rate requests.

Mr. Magaril said while PCI supports insurers taking a look atdata regarding miles driven, "there are many factors that determinewhat a consumer will pay for their auto insurance. As a result, itis necessary to explore in detail the trends of all of the variousfactors that have an impact on auto insurance premiums thatconsumers pay."

He added that PCI's "analysis of auto insurance claims in NewYork and across the country shows that while the number of claimsreflecting vehicle damages has been reduced, it is more costly torepair vehicles today."

According to PCI, average claim costs in New York have increasedby nearly one-third since 2000. "Unless claim costs are reduced, itwould be unreasonable to expect insurance premiums to drop," saidMr. Magaril.

While Mr. Dinallo was able to convince the state's largestinsurer to withdraw most of an increase request that was said to besizeable, GEICO did not cut its rates. One company, GEICOIndemnity, did not drop its rate hike request, but will reduce it"substantially," it was announced.

PCI said a paper it researched highlights statistics indicatingthat U.S. drivers are traveling fewer miles.

According to data gathered by the Federal Highway Administrationfrom state highway agencies, the total number of vehicle milesdriven during the 12-month period ending March 2008 (2.99 trillion)fell 0.8 percent compared to the previous 12-month period.

But Diana Lee, PCI assistant vice president of research, saidthat "while this results in fewer miles driven, we found that thisis only part of a larger trend toward fewer accidents. Our studyshowed that the recent surge in gasoline prices does not appear tobe the cause of generally declining claim frequencies."

PCI research determined, she added, that "the rate of claims wasdropping even during the early 2000s, when gasoline prices wereless than half of today's cost. Based on the data, it cannot besaid that the recent surge in gasoline prices is the cause ofgenerally declining claim frequencies in New York, especially whenfrequencies have shown a slight increase over the last fivequarters."

According to the PCI paper, from the first quarter of 2000 tothe first quarter of this year, claim frequency has fallen by 11.6percent, but severity has jumped up by 31.6 percent and lost costshave risen 16.4 percent.

PCI said its more than 1,000 member companies write 51.4 percentof the U.S. automobile insurance market.