Monday, December 28, 2009

In Washington, state rate reviews have shaved $300 million from auto, homeowners premiums

Rate reviews by the Washington state insurance commissioner’s office have shaved more than $300 million from Washingtonians’ auto and homeowners insurance bills over the past decade.
“Few people know about this process, but it’s a crucial part of our consumer-protection role,” said Insurance Commissioner Mike Kreidler. “By carefully vetting requested rate increases, we save people substantial money on their premiums.”
In order to change rates, some insurers in Washington must get approval from the state insurance commissioner’s office. The companies produce data and calculations showing their justification for the requested rate. The state’s actuaries then review the request.
Each request is viewed on a case-by-case basis. Some are approved as requested. But many of the approved rates end up lower than what the companies originally requested. The changes can save policyholders millions of dollars a year.
For example, from 2000 through Nov. 30, 2009, rate reviews by the Office of the Insurance Commissioner trimmed more than $55 million from proposed homeowners’ insurance rates.
For personal auto insurance, rate reviews saved consumers nearly $246 million. Here’s a breakdown, by year:
Year Change by OIC Savings to consumers

2000 -.1 percent $1.9 million

2001 -1.1 percent $22 million

2002 -.8 percent $16.9 million

2003 -2.8 percent $60.7 million

2004 -1.4 percent $32.2 million

2005 -.3 percent $7.5 million

2006 -.5 percent $12.8 million

2007 -.7 percent $18.2 million

2008 -1.7 percent $44.5 million

2009 -1.1 percent $28.8 million

Accident forgiveness: how it works

Some insurance companies are offering "accident forgiveness" as an option or to keep a valued customer.

Here, courtesy of the National Assocation of Insurance Commissioners, are some explanations and tips:

What is accident forgiveness?

Accidents can mean expensive repair and liability costs, and lead to higher premiums. Accident forgiveness means that an insurer agrees not to increase a customer ’s premium after the driver is involved in an at-fault accident. It is an enticing perk that many insurance companies offer either as part of a standard policy to loyal customers or as an additional endorsement that drivers with a safe driving record can purchase. Some companies also use it as an incentive to new customers for switching from another insurer. Insurers will often even extend the option to parents of teenage drivers.

While accident forgiveness can seem like a “free pass,” it’s important for consumers to understand the conditions and limitations associated with this option:

1. Is there a cost involved?

In some cases, accident forgiveness is included as part of a standard car insurance policy; however, you will typically pay a higher premium for a policy that includes this added protection. More often, accident forgiveness is offered as an additional endorsement – or coverage option – for a fee. Costs vary by insurer, so check with your current insurer as well as a few others if you’re looking for the best deal.

2. Who is eligible?

As with cost, eligibility may vary by insurer. Typically, qualification for accident forgiveness protection is based on two factors:

Customer loyalty: Many insurers only offer accident forgiveness to customers who have been insured with the company for a certain number of years.

Driving record: To qualify for the benefit, many insurers require that drivers have a clean driving record for several years. Not only will insurers look at your accident history, but some consider driving violations as well. That means that one speeding ticket could impact your eligibility.

3. Are all accident forgiveness policies created equal?

In a word, no. Policy conditions can vary greatly. Some policies require you to maintain a clean driving record for up to five years before you become eligible for accident forgiveness. With other policies, the coverage kicks in immediately. Similarly, some policies offer forgiveness for one accident while others forgive multiple accidents.

4. Does accident forgiveness make sense for you?

After an accident, insurers can raise your premiums by as much as 40 percent. If you are a safe driver who pays standard rates, then depending on the cost, accident forgiveness might not make sense for you. But if you have a history of violations and accidents and already pay higher rates, then opting for the benefit might help you save money in the long run. Talk with your insurance company or agent to learn more about how your rates might be affected by an accident.