Auto insurance companies are profiting at unprecedented levels from New York drivers who are spending more on insurance premiums while the industry pays out less in claims, New York City Comptroller William C. Thompson Jr. charged.
He called for insurers to cut premiums for New York City drivers by at least $1.5 billion.
Thompson based his charge on a report by his department which he says reveals that premiums in New York have ballooned even as insurance companies’ losses dropped.
Insurers quickly criticized the report as faulty and maintained that Thompson’s recommendations would only make the market worse for consumers.
Auto insurers reported $10.5 billion in earned premiums in New York in 2005, a jump of nearly 29 percent from 2000, according to the report. Meanwhile, during the same period, incurred losses went down by more than 20 percent, from $6.4 billion to $5.1 billion.
The report concludes that in 2005 only 48.4 cents of each premium dollar was paid to policyholders, a nearly 30 percentage point drop from 2000. This loss ratio was the lowest in the nation and was 11.8 percentage points below the nationwide loss ratio of 60.2 percent, it says.
Thompson also maintained that New York automobile insurers enjoy an “extraordinary return on net worth.” In 2004, industry net worth was 18.6 percent in New York, while the national return on net worth in that same year was 13.2 percent.
In response, insurers said that the comptroller’s report fails to justify its claims.
“This report doesn’t support its political headlines,” said David Snyder, American Insurance Association vice president and assistant general counsel. “The report tries to isolate a single year and draw conclusions that do not hold up over time.”