Forty-eight New York state insurance companies, in spite of a documented decrease in driving and accidents this year, have pending rate increase requests before the New York state insurance department. The department is requiring companies to assess the impact of decreased driving (click HERE to read our story about the nationwide decrease in miles driven) before rate increases – which average about 7 percent among the companies – are approved, but insurers are saying other factors have caused the need for increased labor rates.
"When there are fewer accidents, that’s something we want to look at to make sure rates are at an appropriate level," First Deputy Insurance Superintendent Kermitt Brooks told New York City’s WABC-TV Channel 7.
Insurers are pointing to everything from rising oil prices (which result in higher auto parts costs) to increased health care costs and collision repair rates to justify the proposed increases.
"There has been an increase in the medical costs and auto body collision repair costs, and that’s driven by gas prices going up too," Michael Barry, vice president of the Insurance Information Institute, told Channel 7.
Long Island Auto Body Repairmen’s Association Executive Director Ed Kizenberger contends collision repair rates shouldn’t be hurting insurance companies because the rates paid by insurers haven’t increased dramatically in years (click HERE to read a letter to the editor Kizenberger wrote on the subject).
“What frustrates me is that the insurers are really milking the American public here on premiums,” he said. “For all of the advertising and marketing that they do, if they put a little more effort into controlling their costs, that might affect premiums in a positive way for the consumers, instead of trying to attribute the ridiculously low labor rates that they pay out to collision repair shops as being the reason why they have to raise their premiums.”
A study by the trade group QPC suggested insurers haven’t properly addressed nationwide changes in driving habits and “must focus their pricing and products to address the consumer’s emerging switch to new vehicle designs, new household vehicle mix, new driver usage patterns, and a changing underlying cost structure.” At least one insurer seems to have taken notice of the changing trends in driving. Geico, the state’s largest auto insurer, withdrew a rate increase after assessing the impact of higher fuel costs and less driving at the state’s request.
