Rising Car Insurance Rate In Blue Star State
August 31st, 08Drivers in the state of Texas are facing a double-whammy: gas prices are higher than they’ve been in years, and, now, auto insurance rates have increased as well.
Earlier today, the state’s biggest automobile insurance provider–State Farm Mutual–announced to Texas Department of Insurance that it intends to raise rates by a mean of 2.4% throughout Texas. This change, scheduled to take effect at the end of October, 2008, will affect approximately 2 million State Farm-insured drivers.
Meanwhile, State Farm County Mutual, an affiliate of State Farm Mutual, intends to increase its rates in Texas by 7.3% at the same time. This will affect an additional 200,000 Texas drivers.
This announcement from State Farm follows a similar move on the part of its rival, Allstate, earlier this summer. In July, Allstate subsidiary Allstate Indemnity raised its customers’ rates by 3.6% throughout the state of Texas. At the same time, a smaller Allstate subsidiary, Allstate County Mutual, increased its Texas customers’ rates by 5.5%. A total of about 1.1 million Texas drivers has already been affected by this move.
Jerry Hagins, representing the Texas Department of Insurance, warned the press against reading too much into these recent developments. “There are increases after a long period of stability in the auto market… We’re seeing an uptick now, but we don’t consider this to be more than upward pressure from low prices in the past.”
In 2007, Texas auto insurance companies paid a mean of about $0.64 in claims for every $1 their customers pay in premiums. This is an increase over the previous year’s rates of $0.58 for every $1 of customer money.
Texas auto insurance companies say that an increase in the number of accidents on the road, combined with the higher costs of medical treatment, are the factors responsible for the recent increase in rates. Today’s high gas prices are said to lead to fewer drivers, and thus fewer accidents. However, insurance companies have yet to see the effect this will have on their costs.
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