U.S auto rates to level out in 2004: III

After three years of sharp price increases, auto insurance rates in the U.S. are expected to rise just 3.5% in 2004, says the Insurance Information Institute (III).
However, certain states may not see this leveling trend, such as Florida, Massachusetts and New York, where rising auto theft and fraud continue to put pressure on costs. Overall, despite positive trends lower accident frequency, safer cars and a crackdown on fraud in many jurisdictions negative forces continue to drag the auto product, the III says. This includes rising medical costs and jury awards related to auto accidents, as well as the increasing cost of vehicle repairs.
Last year, auto rates rose 7.8%, while in 2004 the average cost of auto insurance is US$871, just US$29 above 2003.
“Some drivers are even seeing rate decreases, especially those with the best driving records,” adds Robert Hartwig, senior vice president and chief economist of the III. He says strengthened insurer financial performance is also contributing to rate increases slowing down.
However, Hartwig cautions that the costs are increasing for auto insurers. In 2004, insurers will pay US$15-$20 billion for auto-related medical claims. At the same time, vehicle repair costs are rising at double the rate of inflation. And, the average jury award for an auto liability case has risen from US$187,000 to US$323,000 in the last decade.