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Are we seeing a drop in auto insurance rates?


03:39

Are we seeing a drop in auto insurance rates?

Auto insurance costs seem to be on the decline as it has been observed in the two sets of data that are generally used to track pricing. When you look at the recent trends in America auto insurance costs have actually dropped by about 6.75% between 2004 and 2008. There was a rise of around 3.4% during the same time as well.

There are two reliable sources of information such as Bureau of Labor Statistics (BLS) and the National Association of Insurance Commissioners (NIAC) and both of them have reported that the cost has gone up and down during the same period – how could that be possible?

Cesar Diaz, CEO, auto insurance quote comparison site onlineautoinsurance.com states that when you look at the numbers given by NAIC and BLS you must also take into consideration the things that are being measured by each one of them.

When you make a proper observation, you will notice that both NAIC and BLS statistics are basically tracking two separate things. The difference between the two has certain implications that are crucial for consumers.

There is a difference between expenditure and price and it is important to understand the differentiation. For instance, the BLS takes the samples of driver profiles to generate its data, from all over the US. It has reported an increase of 3.4%. For this the quotes are taken from real companies for these profiles and the changes are then tracked down to check the prices over a period of time.

As these are only the samples, the motorists that they are theoretically insuring cannot change their financial protection levels, adjust deductibles, make auto insurance comparisons, or improve their driving records to find a good deal, whereas all of these things may help in reducing the auto insurance costs for the policyholders. But the BLS seems to have set the driver details and policies in stone while choosing the profiles. Adjustments in premiums are made only with regard to the upgrades in vehicles or changes in the pricing structures for insurers. The premiums generally go up when the insurers adjust their pricing and that happens when insurers suffer a lot of losses.

But the NAIC looks at the total premiums that are paid by these policyholders for liability, comprehensive, as well as collision coverage in every state. This is then divided by the number of insured drivers that have purchased the policies. So, this gives an entire view of the real expenditure that these policyholders have in each state.

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