New York State
New York, May 27, 1998
STATE FARM FILES FOR 3.6 PERCENT AVERAGE RATE DECREASE
State's Second Largest Auto Insurer to Reduce Fire & Theft Rates by up to 25.7 Percent
In another sign that New York's auto insurance market has become increasingly competitive and that prices continue to drop for drivers throughout the state, Superintendent of Insurance Neil D. Levin today announced that State Farm Mutual Automobile Insurance Company, the state's second largest auto insurer, has filed to decrease its rates by an average of 3.6 percent. The rate decreases would be effective September 1.
This is the second year in a row that the company has decreased its auto insurance rates. In terms of dollars and cents, State Farm is cutting its rates in New York State by $31.7 million in 1998, following a $36 million reduction in 1997.
"Under Governor Patakis leadership, over the last three years we have cut red tape and burdensome bureaucracy which has led to a highly competitive marketplace marked by improved experience and a steady decrease in auto insurance rates," said Superintendent Levin. "We have stepped up our fraud fighting activities which also has had a direct impact on reducing rates."
This good news is even better for drivers with comprehensive coverage, since for the second year in a row, State Farm will decrease its comprehensive (fire and theft) rates by an average of 20.7 percent state-wide, with New York City drivers seeing decreases of up to 25.7 percent in comprehensive rates. The company also reduced its comprehensive rates by 20 percent in July 1997.
State Farm is the third major auto insurance company that has either filed for or has implemented a decrease in its auto insurance rates in 1998. Last month, Progressive filed for a 4.25 percent average rate decrease, while earlier this month, Travelers was granted an average rate decrease of 3.3 percent. In addition, Prudential filed for a 6.8 percent average rate decrease last month, while ten smaller auto insurers have also decreased their rates thus far in 1998. These decreases range from 0.1 to 6.9 percent.
"After a decade of rate increases, New York's auto insurance market has turned the corner, and rates which began to decrease in 1997, continue to drop even further in 1998," said the Superintendent. "We expect that several more rate reductions will be filed for and approved shortly."
For the past several years, the Pataki Administration has implemented many reforms to the auto insurance marketplace including the creation of flex-rating. Flex-rating allows auto insurers to change their rates + 7 percent without prior approval. Thus flex-rating in the last two years has given insurance companies the confidence and ability to respond quickly to positive developments in the marketplace. This has led directly to lower auto rates overall. For example, 31 insurance companies filed for rate decreases in 1997, including Allstate, the state's largest auto insurer, which decreased its comprehensive rates by 20 percent state-wide.
The following table illustrates the decrease in comprehensive rates for drivers in New York City insured by State Farm as a result of this latest rate filing:
"What makes these rate decreases even more significant is that over the past two years while rates have gone down, at the same time, New Yorkers have had an increase in their coverage," said Superintendent Levin. "The state has more than doubled the required amount of bodily injury liability insurance drivers must maintain. Yet the average rate change for auto insurance coverage in New York State was a decrease of 0.6 percent in 1997, the first time in over a decade that there has been an overall decline in auto insurance rates state-wide. We expect even more significant reductions in 1998.
Individual changes in premiums for State Farm drivers will vary depending on their
coverage, where they live, the kind of vehicle they own, who drives the car and how much
it is driven.