The typical U.S. driver will pay less for auto insurance in 2007 than in 2006, with the average premium expenditure expected to drop by 0.5 percent, reported the Insurance Information Institute.
The average annual cost for auto insurance premiums nationwide for 2007 is estimated at $847 per policy, the first decrease since 1999. This is a $4 per policy decrease. In 2006, the typical U.S. driver paid $851.
The trend in the auto market stands in stark contrast to the health insurance industry. Premium rates for employer-sponsored health policies have risen 87 percent over the past six years (2000-2006), according to a survey by the Kaiser Family Foundation and the Health Research and Educational Trust.
"Competitive marketplaces, safer cars, aggressive fraud-fighting and innovative underwriting are joining forces in 2007 to drive down the price of an essential financial product," said Robert Hartwig, executive vice president and chief economist of the I.I.I. "This is great news for drivers who were battered this year by higher fuel prices and rising auto repair costs."
Mr. Hartwig said that savings would vary by driver, depending on his or her accident experience, and by state, with the greatest savings in states with the most competitive markets and lower savings in states where stringent regulations can counteract market forces.
Drivers pay more for auto insurance in states with significant urban populations, greater traffic density and a higher cost of living. Tort liability and other auto laws as well as each state's auto body repair labor costs, liability coverage requirements and theft rates also have an impact on auto insurance prices.
The I.I.I. attributed the auto insurance price reductions to declining claim frequency (down anywhere from 3-to-5 percent in 2006 as compared to 2005), coupled with very modest increases in claims severity, with the average cost per claim–a figure that includes the price of medical care and property damage–rising only 2-to-4 percent in 2006 as compared to 2005.
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