NEW YORK, May 18 /PRNewswire/ -- The high costs of injury claims and large
number of damage claims from auto accidents in New York are far above the
national average, keeping the price of auto insurance in the state high.
The costs drivers associated with medical care, auto repair, litigation
and fraud are behind New York's high auto insurance rates, not the profits of
auto insurance companies, Bernard L. Bourdeau, president of the New York
Insurance Association, told the Assembly Standing Committee on Insurance.
Appearing at a public hearing examining the costs of auto insurance,
Bourdeau explained that auto insurance companies have paid out more in claims
than they received in premiums from individual drivers in seven of the past
ten years. For commercial auto insurance, the coverage sold to businesses,
auto insurers have had underwriting losses for ten consecutive years
"Auto insurers in New York do not make their profits from underwriting
insurance, but by investing premium dollars," he said. "When auto
underwriting is combined with investment income, auto insurers on average earn
about five percent on the premium dollar -- about the same as the national
Bourdeau observed that it is the 95 cents of the premium dollar paid out
in claims and other expenses that must be examined to identify cost drivers
and ways to reduce premiums.
Citing insurance industry studies on injuries in auto accidents, he noted
that in New York State, the average cost of a bodily injury claim in New York
is $21,471 per claim, a staggering 124 percent higher than the national
The cost of claims under the Personal Injury Protection (PIP) portion of
New York's no-fault auto insurance policy is $5,763. That amount is
44 percent higher than the national average, according to Bourdeau.
The frequency of claims for property damage in New York State is
15 percent higher than the national average, while the cost of those claims is
slightly below the national average, he added.
To help reduce costs, Bourdeau urged approval of amendments to the state's
no-fault insurance law that could eliminate as much as $100 million in
fraudulent insurance claims. In addition, he said the adoption of a voluntary
no-fault managed care program would further reduce premiums.
He also recommended the continued use of lower costs, competitively-priced
cosmetic parts for auto repairs. Bourdeau said that measures that prohibit
the use of these competitive parts would only drive up the cost of insurance
In closing, Bourdeau cautioned that state mandated rate roll backs or
government price fixing would only serve to reduce competition in the market
place, inevitably leading to higher prices.
"These days most companies are not making any profits in the New York auto
market," he said. "Any measures to restrict their prices would only drive
those companies out of New York."
The New York Insurance Association is a trade association of
property/casualty insurance companies that provide insurance coverage for
autos, homes and businesses throughout New York State.
SOURCE New York Insurance Association