State’s Auto Insurance Rates Rising Faster Than Most

The Charleston Gazette, July 19, 2004

Automobile insurance premiums appear to be climbing more quickly in West Virginia than in most states. When 2001 national statistics — the latest available — were released by the National Association of Insurance Commissioners, they showed the state had moved from being the 20th most expensive state to 16th.  (Ratings - http://moneycentral.msn.com/content/Insurance/Insureyourcar/P88635.asp)

“We’re seeing an increase in prices,” said Jane Cline, state insurance commissioner.

Full comprehensive insurance for a single automobile in the state averaged an estimate of $841 for 2001, the study shows. That figure is well above the national average of $705 for 2001.

And, it means West Virginians pay more than residents of all but one of the five bordering states. It costs a state resident almost $196 more annually for insurance than it does a Kentucky resident living just across the Tug Fork River for the same coverage.

Kentucky was the cheapest of the surrounding states, followed by Ohio ’s $682 average, Virginia ’s $688 and Pennsylvania ’s $807. Only Maryland residents paid more for the same automobile coverage than West Virginians . In Maryland , full comprehensive vehicle insurance averaged an estimated $853, making the state the 14th most expensive in the nation.

Nationally, New Jersey has consistently had the highest auto insurance costs in the nation and there seems to be no end to that. Residents of that East Coast state paid an average of $1,183 in 2001.

Also paying more than $1,000 annually for the coverage were residents of New York ; Washington , D.C. ; Rhode Island ; and Massachusetts .

The cheapest insurance available was in Iowa , which was the only state to have average premium costs below $600.

Cline said state premium prices have risen since 2001, but national experts have predicted premium costs should begin to stabilize this year. A study by Cline’s office shows poor loss results and higher underwriting expenses are part of the reason for the state’s higher costs. Loss results stem from state residents receiving more severe injuries than those in other locations. “The average cost of a bodily injury claim is 50 [percent] to 60 percent more in West Virginia than the countrywide average,” the study concludes.

The higher underwriting costs are attributable to the state’s premium tax, the study concludes. General expenses compared to most states are identical, while commissions vary, the study said.

Many state residents have had problems getting vehicle insurance, even at the current rates. Several insurance firms placed a moratorium on writing new policies in the state, causing a severe problem because only a few companies dominate the industry. “In 2002, the last year that [state] data are available, four company groups wrote over 70 percent of personal auto insurance in our state, compared to a national average of 15 companies writing 70 percent of a particular state’s market,” the state study states.

Cline hopes some insurance reforms enacted in the last legislative session will stabilize rates. A major hope is that a fraud unit will help weed out bogus, or illegal, claims. West Virginia had been one of only 10 states without such a unit. “The Insurance Information Institute estimates that fraud inflates a policyholder’s average annual premiums by $100 to $200 [annually] per vehicle,” the state study states.

Lawmakers also lowered the state’s threshold for deciding what is legally defined as driving under the influence of alcohol. Lowering the blood alcohol rate from 0.1 to 0.08 is expected to reduce DUI-related deaths by 7 percent, which would translate to a $40 savings on each insurance policy, the state study estimates.

The state has still not passed a primary seat-belt law that allows police to cite a driver only for not wearing the device. Such a law is estimated to save the lives of another seven residents a year.