Archives of the Mayor's Press Office

FOR IMMEDIATE RELEASE
Date: May 15, 1997

Release #273-97

Contact: Colleen Roche (212) 788-2958 or Robert Schulman (212) 487-4274 (DCA)


MAYOR GIULIANI SUES AUTO INSURANCE INDUSTRY TO FORCE LOWER RATES FOR NYC MOTORISTS
Suit Seeks $$ Millions For City Drivers Overcharged By Big Insurance Companies

Bolstered by a report from the Mayor’s Task Force on Insurance Rates which concludes that insurance companies have significantly overcharged City residents for comprehensive auto insurance while car thefts in the City have plummeted, Mayor Rudolph W. Giuliani today announced that the City of New York has sued seven major insurance companies to force lower rates for New York City motorists. A class action suit seeking millions of dollars in compensation for insurance company overcharges was also filed on behalf of all comprehensive policyholders in the City.

The City’s lawsuit, the first of its kind in the nation, contends that the massive 46.7 percent reduction in car theft since 1993 should have been accompanied by a proportionate reduction in comprehensive insurance rates -- the type of insurance which covers such losses. This is particularly true, the Mayor said, because theft represents nearly 80 percent of all losses paid under such insurance in New York City.

Mayor Giuliani said, “Today, we stand in the heart of Park Slope, a neighborhood which in the past three-and a-half-years has experienced a decline in auto theft of 52 percent. And this year alone, the 78th Precinct has seen a 21 percent decline. Despite the reduction, the annual car insurance premium has increased 51 percent for an average 35-year-old male driver in Brooklyn in just the last two years.

“Citywide, the crime rate has been reduced to its lowest level since the late 1960s. The reduction in automobile theft has been even more dramatic -- over the past three-and-a-half years, car theft has been reduced by 46.7 percent. And sustained decreases have continued into 1997,” the Mayor added. “Yet, the big insurance companies have increased their premiums, reaping huge profits even while their car theft pay-outs have decreased.

“Most big insurance companies offer safe drivers discounts. It’s about time we had a safe-city discount for New York.

“These punitive rate increases affect families in every borough in this City. It’s simply unacceptable and has to stop. New York City motorists deserve a break and today’s important legal action is our first step in bringing equity to this system,” the Mayor concluded.

The Insurance Companies named as defendants in the City’s law suit are: Aetna Casualty & Surety Company; Allstate Insurance; Government Employees Insurance Company (GEICO); Liberty Mutual Insurance Company; Nationwide Mutual Insurance Company; State Farms Fire & Casualty Insurance Company; and Travelers Indemnity Company.

The City is bringing action on behalf of the people of the City of New York under the authority of Chapter 17 Section 394 of the City Charter. According to the City’s lawsuit, insurance companies have a statutory duty to ensure that automobile insurance rates are neither excessive nor unfairly discriminatory. When market conditions indicate that rates should go down, insurance companies are legally obligated to reduce their rates. By failing to do so, the big insurance companies put their interests above both the law and the rights of policyholders.

Premiums paid by New York City motorists over the last two years have not decreased and in many cases have increased sharply. For example, data from the New York State Department of Insurance’s “Consumer Guide to Automobile Insurance” lists the average annual premium paid by an adult male, age 35 as:
BoroughAnnual Premium Paid% Increase

199419961994 v. 1996
Bklyn.$909$1375+ 51%
Bx Urban$557$757+ 36%
Bx Suburban$503$705+ 40%
Manh$517$791+ 53%
Qns Urban$581$831+ 43%
Qns Suburban$661$1,017+ 54%
S.I.$513$771+ 51%

The following is a sampling of the dramatic auto theft reductions seen in some City neighborhoods.
Neighborhood/
Precinct		# Fewer Auto Thefts
93 v. ‘96		% Decrease
‘93 v. ‘96
Gravesend, Manh.Beach,
Sheepshead Bay (61st Pct)		 1,614 - 48.9%
Parkchester, Soundview (43 Pct)750- 36.5%
Upper East Side (19th Pct) 1,715- 49.6%
Fresh Meadows, Jamaica Estates
(107th Pct)		2,776- 56.6%
New Dorp, Great Kills,
Todt Hill (122nd Pct.)		 1,254- 44.6%
Corporation Counsel Paul A. Crotty said, “The City’s lawsuit targets the insurance companies and insists that the rates for comprehensive insurance should be reasonable and non excessive. Based on the facts developed by the Mayor’s Insurance Task Force, insurance rates should be far lower and give New Yorkers the cost benefits which flow from the substantial decline in auto theft rates.”

Consumer Affairs Commissioner Jose Maldonado, who chairs the Mayor’s Task Force on Insurance Rates, said, “Insurance companies want people to think this is a complicated issue. It’s not. Car theft is down dramatically in New York City, and we should see proportional discounts in comprehensive car insurance. When you clear away all the actuarial gobbledygook, that’s the heart of the matter. The Task Force found more than ample evidence that insurance companies have been holding out on their customers in New York City.”

Mayor Giuliani thanked Commissioner Maldonado and all the Task Force members for their commitment and diligence in attempting to ensure that insurance premiums paid by hard working New York car owners reflect the reality that cars are safer on the streets of this City than they have been in decades.

The Mayor’s Task Force on Insurance Rates was charged with investigating the appropriateness of comprehensive car insurance premiums in the City given the steep decline in auto theft. The Task Force’s final report, Taken for a Ride: Have New -more- Yorkers Reaped the Rewards of the Decline in Auto Theft?, was issued today and formed the basis of the City’s lawsuit. Task Force members include Police Commissioner Howard Safir; Eugene Anderson, partner in the law firm of Anderson, Kill & Olick; Corporation Counsel Paul Crotty; Mark Geistfeld, a New York University law professor; Barbara Berger- Opotowsky, President of the Better Business Bureau; John Riley, Director of Corporate Risk Management at Dun and Bradstreet; and Stuart Rosenthal, General Counsel of the Greater New York Automobile Dealers Association. Representing the individual plaintiffs in the class action suit, free of charge, is the law firm of Anderson Kill and Olick. The City is represented by the New York City Law Department. Copies of the City’s lawsuit and the Task Force Report are available through Mayor Giuliani’s Press Office at City Hall.




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