Proposal to hike NY auto insurance rates

August 25, 2008 3:14:58 PM PDT
Think about it. If you are driving fewer miles because of higher gas prices and in turn there are fewer accidents, why then are insurance rates on the rise? "It makes no sense, and you're getting less," Gerard Corkett said.

Corkett pays $2000 a year for his insurance, so he figures why not a break?

"I have a clean license and now they want to raise it seven percent," he said

Forty-eight companies are asking the New York State Insurance Department for rate hikes, which average about seven percent.

However, now insurance regulators are requiring companies to assess the impact of reduced driving on their 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 Superintendent Kermitt Brooks said.

New Yorkers pay an average of $1,122 a year for insurance per car. That's the third highest in the country.

Insurance companies argue other factors affect the increases.

"The increase in the medical costs and auto body collision repair costs, and that's driven by gas prices going up too," said Michael Barry, who is vice president of the Insurance Information Institute.

Three companies -- Allstate, Geico and State Farm -- insure almost half of New York's drivers. Geico, the largest, recently withdrew a rate increase after assessing the impact of higher fuel costs and less driving.

A change in the law coming next year would allow insurance companies to increase or decrease rates by five percent without formal approval.

But insurance regulators say they will not hesitate to challenge an increase to keep the cost to drivers in line.

STORY BY: Tim Fleischer


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