III Says Auto Rates Rise Smallest In 4 Years
NU Online News Service, March 31, 11:05 a.m. EST?Auto insurance premiums are expected to rise 3.5 percent on average this year, the smallest increase in four years, the Insurance Information Institute said.[@@]
The projected increase represents a substantial slowdown from 2003 when auto premiums rose 7.8 percent. The average cost for auto insurance for 2004 is estimated at $871, a $29 increase over last year, III said,
The declining number of auto accidents due to better drivers, safer cars, and crackdowns on fraud and abuse has contributed to the decline, the New York City-based association said. However, rising costs for medical care, vehicle repairs and escalating jury awards remain a problem, III said.
"Unfortunately, while drivers today are filing fewer claims, those that are filed cost more," noted Robert Hartwig, senior vice president and chief economist for the III, in a statement. "It costs more to repair cars, particularly following accidents involving sport utility vehicles."
Insurers will pay from $15-to-$20 billion in medical claims, said Mr. Hartwig, noting the higher costs for hospitalization, pharmaceuticals, and the inability of some states to stop abuse of medical treatments and associated medical costs.
"Collectively, these high costs more than offset the decline in accident frequency, pushing overall rates upward," he said.
III said jury awards for auto liability cases have increased on average from $187,000 in 1994 to $323,000 in 2001, according to data from Jury Verdict Research.
Rising theft rates and fraud also contribute to the increases, III said, keeping rates higher in some states such as Florida, Massachusetts and New York.
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