Despite ongoing news about our slumping economy, financial services and business in general, there is good news to report about Hawai'i's insurance industry: Insurance companies in the state are financially stable; premiums in many lines have been coming down; and new companies continue to enter the state, providing additional choices for Hawai'i residents.

Last summer, when gas prices shot up, the Hawai'i Insurance Division recommended that auto insurers file reduced rates, since we all would be driving less, lowering the risks of accidents. Auto insurers complied, and we have seen automobile insurance rates drop by an average of 5 percent, saving drivers more than $33 million. Homeowner insurance rates have also been reduced in the past year by about 12.8 percent, saving consumers more than $40 million in premiums. Life insurance premiums have decreased as well, due to the adoption of new mortality tables that show we are all living longer.

For many businesses, commercial liability insurance has been a difficult area. But in April, business customers saw an 8.6 percent reduction in rates. Workers compensation is a big expense for many businesses. It's notable then that rates have come down more than 60 percent over the past four years. That's more than any other state in the nation, except a few states that passed major structural changes in their workers' compensation system.

It wasn't too long ago that our residents faced the possibility of not being able to buy hurricane insurance. In the last two years, though, eight new hurricane insurers have entered the Hawai'i market. These new insurers bring additional capital, additional choices and additional competition in this difficult area of risk.

Health care costs continue to rise, but the average premium paid for health insurance in Hawai'i is still less than the average in the rest of the U.S., and the percentage of uninsured residents is among the lowest of any state.

In 2003 it took six months to one year to process an application for an insurance company license to do business in Hawai'i. There were up to 150 companies on backlog. Through increased efficiency and reduced processing time, today there is no backlog and the average time to process an application is 60 to 90 days.

Our educational outreach to teach employers about the benefits of safe workplace programs resulted in fewer injuries, which lead to reduced workers compensation premiums. We educated hurricane reinsurers that Hawai'i was a different risk than the Gulf Coast, and therefore should have lower premiums.

Insurers in Hawai'i are in sound financial shape. State examiners regularly check insurance companies to verify that they are financially stable and have the funds to pay claims as they arise. When insurance companies have failed in past years, the Hawai'i Insurance Division has moved quickly to marshal assets and pursue claims. As a result, we have been able to pay 100 percent to creditors and claimants in several liquidated estates, far above the 10 percent to 20 percent payouts that are the norm in liquidations.

As of Aug. 1, the Federal Deposit Insurance Corporation (FDIC) reports that across the nation 69 banks have failed this year. No insurers have failed. Even AIG's 71 insurance subsidiaries are sound. The 176 financial services subsidiaries of AIG, regulated by the Federal Office of Thrift Services, were the source of the giant financial holding company's problems. Thus, U.S. Treasury Secretary Timothy Geithner testified that "insurance has been an isle of calm in the otherwise turbulent seas of financial services."

Sound insurance markets are important for Hawai'i. Almost everyone is required to buy insurance of some kind, either by law or contract. The law requires auto insurance if you drive, workers' compensation and health insurance if you own a business. Mortgage companies require homeowners and hurricane insurance.

Insurance companies are an important part of our economy. We have about 1,000 companies licensed to do insurance business in Hawai'i and they wrote approximately $9 billion in premiums in 2008. More than 24,000 people were directly employed in the industry. Many other businesses, such as doctors, hospitals, lawyers and auto repair shops, are heavily dependent on the insurance industry.

Through prudent regulation, education, efficiency, and working together with consumers, insurance companies, businesses, employers and employees, we have established financially sound and competitive insurance markets in Hawai'i. In this important area there is good news for the people of Hawai'i, an isle of calm to help us work through the challenges of our turbulent economy.

J.P. Schmidt is the Hawai'i state insurance commissioner. He wrote this commentary for The Advertiser.