Insurers drive down rates for auto coverage in New York
Fewer car accidents, new anti-theft technology and safer cars are lowering car insurance rates across the country this year for the first time since 1999.
The better news: Rates are dropping significantly in New York, thanks to a crackdown on fraud and much keener competition, according to insurance industry experts.
Nationwide, claims were down 3 to 5 percent in 2006 and the average cost per claim, a figure that includes the price of medical care and property damage, rose only 2 to 4 percent, according to Michael Barry of the Insurance Information Institute.
In New York, declining rates have spawned an advertising blitz in which the top players - Geico, Allstate and State Farm write almost half of local policies - are battling for market share.
While Geico did not return requests for comment, The Wall Street Journal estimates the firm spent as much as $400 million on marketing in 2005, including the sponsorship of Geico SportsNite, a daily highlight show on SportsNet New York. Earlier this year, the firm paid $1.6 million in a two-year deal that places the Geico name on each tollbooth at the George Washington Bridge and gives it space on the Port Authority’s Web site.
“It’s hard to quantify how much is spent on advertising, but look what’s going on,” Barry said.
“New Yorkers are getting bombarded with direct mail, television advertising and every other form of advertising. Even a casual observer knows this is good for consumers.”
Long Island-based TSC Direct, which sells car insurance in New York City and Long Island, has also turned up the heat, flooding local newspapers and radio waves with a cure for “reptile dysfunction” in a Viagra-inspired swipe at the Geico gecko.
“We have to do something in order to be heard,” said Penny Hart, the firm’s president. “We have no choice.”
TSC, a unit of Jericho-based Tri-State Consumer Insurance Co., boasts that it can save consumers as much as 35 percent on car coverage. It charges an average $890 per year, about 20 percent lower than three years ago, according to Hart.
Hart said the company’s 16,000 auto policyholders pay less today because the state has been significantly more aggressive in fighting fraud.
“It’s a culmination of lots of reasons, including the change in New York’s no-fault laws,” added Bill Goff, a New York-based product manager for Allstate, which has dropped rates by 5 percent in each of the last two years. “But fraud detection plays a large role.”
In 2004, fraud cost insurers $1 billion in New York alone, according to the insurance institute’s Barry.
“The state, along with law enforcement, took a much harder look,” he said. “And it’s saved ratepayers a lot of money.”
Despite the decline, New York remains near the top of the cost list. In 2004, the latest statistics available, the average New Yorker paid $1,171.62 to insure a car, the third highest rate in the country.
New Jersey, at $1,221.08, and the District of Columbia, with an average rate of $1,184.63, topped the list. New York had held the second-most expensive spot on the list in previous years.