One of New York state’s largest auto insurers, GEICO, agreed to drop two requests for rate hikes after a plea by the state’s top regulator to consider the effect of high gas prices on customers’ driving habits.
Following discussions with the New York State Insurance Department, GEICO agreed to withdraw a rate increase request recently filed for its primary companies, GEICO and GEICO General, the department said. Together, those two units write more than 75 percent of the company’s auto policies in the state. GEICO will also substantially reduce its rate increase request for its remaining company, GEICO Indemnity.
Other automobile insurers which have previously filed new rate requests must assess the impact of reduced driving on their rates and under a bulletin issued by the department this week. Superintendent Eric Dinallo said the move should put downward pressure on what he described in a statement as upward-moving rate requests.
The U.S. Department of Transportation estimated that the number of miles New Yorkers drove dropped 4 percent in May, compared with May 2007. Similar trends were seen around the country and experts predict those drops in mileage to continue.
“Paying more to gas up your car may mean paying less to insure it,” Dinallo said. “Higher gas prices lead to less driving, and as New Yorkers drive less, the number of accidents should go down… Fewer accidents should mean lower auto claims costs for the insurance companies, and my job is to make sure that these savings are passed on in the form of lower rates for New York drivers. GEICO is to be commended for its decision to withdraw its rate increase request based on how changes in driver habits in New York affected its recent loss experience. We hope other insurers will also carefully evaluate the effects of reduced driving in New York.”
New York residents now pay approximately $10 billion annually in auto insurance premiums, the department said.