By Frank Cho
Advertiser Staff Writer
The overall costs of insurance for Hawai‘i’s drivers, homeowners and businesses continue to fall, despite signs that rates may be on the rise again, according to the state’s chief insurance regulator.
AIG Hawaii this month raised its auto coverage rates an average of 8.9 percent, and workers’ compensation carriers have said they also need to raise their rates to make up for recent losses.
But state Insurance Commissioner Wayne Metcalf said yesterday that those are isolated cases, and insurance rates in Hawai‘i may not even have reached bottom.
"We think home insurance and workers’ compensation are very stable, but auto insurance has a little more to go," Metcalf said.
Since insurance reform started in Hawai‘i in 1995, workers’ comp premiums have fallen more than 70 percent, and auto insurance rates are down 20 percent, Metcalf said yesterday.
During those same years, Hawai‘i went from having the second-most-expensive auto insurance premiums in the country to 11th place. This year, the state is expected to rank about 18th in the annual nationwide poll by the National Association of Insurance Commissioners.
The drops came after the Legislature passed laws in 1995 to reform workers’ comp insurance, primarily by cutting medical fee reimbursements. In 1997, the Legislature tackled auto insurance premiums, which were among the highest in the nation. Those reforms reduced mandatory coverage requirements and gave the commissioner power to order carriers to file lower rates.
"We are comfortable that we can achieve stability," Metcalf said.
"That is not to say that there won’t be some rate adjustments," although they likely won’t be as large as in years past, he said.
Metcalf said he also does not expect increases in workers’ comp rates.
State Farm Insurance just lowered its auto insurance rates 4.8 percent, and HIG Insurance has another rate reduction on Metcalf’s desk awaiting approval.
"If the insurance commissioner is telling the public to not worry, then I agree. We have a very stable market," said Robin Campaniano, president of AIG Hawaii and a former state insurance commissioner.
Campaniano said rising costs of repairs and his company’s narrow profit margins caused it to ask for the most recent rate hike.
"This thing always happens after periods of long rate declines," he said.
Marty Simons, the state’s insurance actuary who compiles much of the data used by the insurance commissioner, said Hawai‘i’s uninsured motorist problem also has been reduced with the availability of cheaper insurance.
"More people can afford coverage than before, and that is helping," Simons said.
He estimated that the percentage of uninsured drivers in Hawai‘i has fallen 44 percent below the national average from 26 percent three years ago.
State Farm, the state’s biggest insurance carrier with about 120,000 auto policies and more than 80,000 homeowner policies, has reduced its auto insurance rates by 35 percent over the past three years.
"Claims experience has been very good. We are seeing fewer claims, and we are paying less for those claims ...," said Carolyn Fujioka, a spokeswoman for State Farm.
Metcalf said any future adjustments to rates will be scrutinized by before being approved. Insurance carriers are required to file detailed reports with the state Insurance Division when seeking rate increases.
"Based on what we know, we think that we are in a period where (rates) are going to be either favorable or stable," Metcalf said. "We don’t see anything in the market today that signals a trend upward."
