Another bundle of joy for the insurance industry from the AP wire and the State of New York:
Car insurance companies are charging New York drivers steeper rates even though the amount of money they are paying out in claims in the state has dropped, New York City Comptroller William Thompson said Wednesday.
Auto insurers earned $10.5 billion in premiums in New York state in 2005, a jump of nearly 29 percent from $8.2 billion in 2000, according to a report by Thompson’s office. But during the same period, the report found, the insurers’ losses dropped by more than 20 percent, from $6.4 billion to $5.1 billion.[...]
Thompson called on Governor-elect Eliot Spitzer to address the impact of high car insurance rates on New Yorkers. “These onerous rates — and the notable absence of a justifiable reason for them — are simply unconscionable,” he wrote in a letter to Spitzer.
Thompson said car insurers should lower their New York state premiums by at least 15 percent or about $1.5 billion per year.
In addition, he said the state should create an Office of the Insurance Consumer Advocate to represent consumer interests within the Insurance Department.
It’s been a while since I did personal auto insurance. I can understand why a 48% loss ratio might look too profitable to a consumer advocate, but I’m not sure how loss adjustment expenses and loads from subsidizing the assigned risk plans are running in New York these days. If memory serves, they were rather atrocious, at least once upon a time.
Besides, one profitable year does not a fleecing make. Sometimes insurers have good years, which help to offset the bad years (like the 78% loss ratio cited for 2000). If the free market is allowed to operate, competitive pressures should drive prices down if the 2005 results aren’t an anomaly.