I.I.I. Challenges CFA Auto Report by Pointing to Lower Consumer Costs

On the heels of a Consumer Federation of America report charging that auto insurers put too much weight on non-driving rating factors, the Insurance Information Institute released figures showing that insurers’ use of a wide range of rating factors has held down consumers’ expenditures on auto insurance.

I.I.I. says in a statement that, for consumers, the average annual expenditure for U.S. auto-insurance coverage in 2012 is expected to total $839. While this total is higher than 2011, and also a continuation of an upward trend that began in 2010, I.I.I. says the expected 2012 total is less than the $842 the typical U.S. driver spent for coverage in 2004 ($842). 

Furthermore, I.I.I. says that when the figures are adjusted for inflation, “auto insurance expenditures are expected to be 19 percent lower in 2012 than in 2003 and lower than at any point in nearly 20 years.”

Tying these figures to the CFA report, and to CFA’s Director of Insurance Robert Hunter’s call for regulators to look into how non-driving rating factors impact low- and moderate-income families, I.I.I. says, “If state insurance departments were to heed the CFA’s advice and restrict the number and type of rating factors insurers are currently employing—all of which have long been approved by state insurance departments—auto insurance premium expenditures would almost surely increase, with good drivers paying more and riskier drivers paying less.”

I.I.I. President Robert Hartwig adds in a statement, “Auto insurers have made great advances in their ability to assess risk, and this trend, along with innovative new products, such as pay-as-you-drive policies, has resulted in highly competitive auto insurance markets in every state.” 

He also says that state assigned-risk pools are insuring fewer drivers than in previous years.