Press Release Archives - #409-96 - Auto Insurance Rates

Archives of the Mayor's Press Office

FOR IMMEDIATE RELEASE
Date: August 29, 1996

Release #409-96

Contact: Colleen Roche, Jack Deacy, Dwight Williams (212) 788-2958 or Martin Barreto (212) 487-4283 DCA

MAYOR GIULIANI RELEASES AUTO INSURANCE REPORT: NYC AUTO THEFT DOWN 51% SINCE 1990; INSURANCE CLAIM PAYOUTS DOWN 17%; BUT CAR INSURANCE RATES DO NOT REFLECT DOWNWARD TREND

Mayor Rudolph W. Giuliani today released a Department of Consumer Affairs auto insurance preliminary report revealing that rates paid by New York City consumers for comprehensive automobile insurance do not reflect the dramatic 51% decline in auto theft rates since 1990. Joining the Mayor at a City Hall press conference were State Senator Guy Velella, who chairs the State Senate Committee on Insurance, Consumer Affairs Commissioner Jose Maldonado and Police Commissioner Howard Safir.

"It is clear from this report that New York City consumers have not reaped the benefits that should have accrued to them as a result of the New York City Police Department's remarkable success in driving down auto theft," Mayor Giuliani said. "There can be little doubt that a five-year decrease in car theft of 51 percent ought to warrant significant savings in comprehensive automobile insurance."

The preliminary report, entitled "Driving Down Auto Theft: Are New York City Consumers Benefiting from the Decline in Automobile Theft?" was prepared by the City's Department of Consumer Affairs at the Mayor's request. Among its findings are:

Between 1990 and 1995 car thefts in the City had an unprecedented drop of 51%, from 146,925 automobiles reported stolen in 1990 to 71,543 reported stolen in 1995, with the most dramatic reductions occurring from 1993 through 1995. Had the number of auto thefts remained constant at the 1990 level, 188,372 additional cars would have been stolen in the years 1991 to 1995.
During the same period, insurance company payments arising from comprehensive auto insurance claims decreased along with auto thefts. The companies paid a total of $429,391,173 in claims in the four quarters of 1990. For the year ending in the third quarter of 1995, insurance companies in New York State paid out $358,170,237 in claims. That represented a decrease of $71,190,936, or 17 percent.
Insurance companies were charging consumers more for comprehensive auto insurance in New York State even as they paid out significantly reduced amounts for claims. Between 1990 and 1994, the average premium for comprehensive auto insurance in New York State rose from $153.52 to $187.36, an increase of 22 percent. This occurred at the very time when grand theft auto was declining in the state, forced down by the reduction in auto theft in New York City.
The report also points out that comprehensive car insurance for a 35-year old male with a $200 deductible, who owns a new moderately priced car, has increased over the last several years, no matter where in New York City he lives. That is especially true in Brooklyn, even though auto theft in the borough decreased by 53 percent over the last five years.

"At the very least the data in this preliminary report suggests that New York City's consumers have not realized the savings they should have, given the New York City Police Department's remarkable success in reducing the number of automobiles stolen in the City's five boroughs," Commissioner Maldonado said. "We believe this report raises several intriguing questions for the insurance companies and their regulators. It remains for the New York State Insurance Department, as the entity charged with regulating the insurance industry , to perform more detailed analyses. We want to know how the State Insurance Department and the insurance companies explain why the unprecedented reductions in automobile theft have not been passed along as savings to the citizens of New York City."

"The New York City Police Department is proud of its role in sharply reducing auto theft in our City," Commissioner Safir said. "It is inexplicable that this reduction in crime has not meant a reduction in auto insurance premiums. This preliminary report is the first step in securing what is rightfully due all automobile owners in this City. As we continue our relentless effort to fight crime at all levels, the Department looks forward to working with the task force to help reduce insurance premiums for all New Yorkers."

The report also describes a lack of adequate oversight by the State Insurance Department and a deficient requisite data processing capability. In reviewing the State's insurance company filings the Department of Consumer Affairs found little uniformity in the data insurers must submit to justify rate proposals.

The preliminary report suggested that following measures be taken:

The State Insurance Department should exercise more active oversight of insurance companies to ensure that policy holders pay fair premiums for the coverage provided.
The State Insurance Department require insurance companies to file standardized data when requesting premium changes.
The State Insurance Department compile zip-code level data on automobile theft. The availability of such data will facilitate more accurate tracking of losses and assessment of risk. We further recommend that the State Insurance Department consult with the New York City Police Department on the development of appropriate data reporting systems.
Further examination of comprehensive auto insurance rates in New York City should be undertaken by a task force of experts appointed by the Mayor.