Auto insurers raising premiums
By Deborah Adamson
Advertiser Staff Writer
At least half a dozen insurers are raising their auto insurance premiums this year, the state Insurance Division said yesterday, citing a sharp increase in thefts and higher medical costs as the chief culprits.
The state Insurance Division approved an average 4.6 percent increase for AIG Hawai'i, effective Friday. Hartford will raise its premiums by 6.3 percent on Oct. 1.
First Insurance raised rates by 9.7 percent on average on July 1, while State Farm's increases, effective June 15, came to 10.3 percent and 12 percent (State Farm Mutual and State Farm Fire & Casualty, respectively). Dtric raised rates on March 1 by 4 percent. RLI was approved for a 7 percent increase, but an effective date hasn't been set.
Insurers say that these are averages; not all customers will see increases. The actual premium paid depends on many factors, most notably driving records.
The rate increases reverse a downward trend on average annual costs for auto insurance in Hawai'i. From 1997 to 2001, rates fell 23 percent to $705.10, the biggest decline in the nation, according to the latest figures from the National Association of Insurance Commissioners.
Insurance Commissioner J.P. Schmidt says in spite of the recent increases, Hawai'i motorists still are paying less than what they are used to historically.
"I don't think they have made up the 23 percent decrease," he said. Moreover, "in the past couple of years, there have been increases in the insurance rates, but I think they have been lower than what's occurred across the nation."
Mike Onofrietti, vice president and actuary at AIG Hawai'i, said the insurer applied for a rate increase because of the number of auto thefts on O'ahu, which went up by 52 percent in 2002 from 2001. "That's got to translate into higher auto insurance rates," he said.
The insurer last raised rates in February 2001.
Onofrietti also blamed higher medical costs for the increase, which First Insurance and Dtric echoed.
"We are seeing increases in medical and physical damage expenses," said Steve Tabussi, First Insurance vice president of customer solutions.
Jim Gormley, vice president of underwriting at Dtric, said losses from two areas of business were "more than what we anticipated," mainly due to higher medical costs.
But AIG Hawai'i said in the long-term, rates have fallen for motorists.
As of the end of July, the average premium per vehicle came to $730 a year, Onofrietti said. That's down from $900 a year in 1992. He said the cost per policy — which could include more than one vehicle — came to $1,175 vs. $1,400 in 1992.
Rates began falling in the late 1990s in part because legislative reforms led to a cutting back on auto insurance benefits, Onofrietti said.
First Insurance's Tabussi said that since 1996, its average auto insurance premiums have decreased by 15 percent, even after including this year's rate increase.
