Trend of Less Driving Benefits Insurance Firms
May 29, 2008 by Be Safe Insure
Filed under 1. Commercial Insurance, Car - Truck
Stifel Nicolaus Analyst Meyer Shields estimates that auto insurers could benefit from the falling number of miles that Americans drive.
Insurers may see declines in accident frequency and underwriting, says Shields. He assumes the reduced mileage is due to hiked gasoline prices.
The reduction of miles driven could result in higher-than-expected underwriting results. Progressive reported in April that its net income decline of $28 million, a 2%t decline in underwritten premiums, and a combined ratio of 91.7.
Shields said, “In the near term, we believe these companies should benefit from reduced driving, which should reduce accident frequency and boost underwriting profits, while still benefiting from increasing consumer shopping that should improve their policy and premium growth.”
Meanwhile, in Mississippi, State Farm filed a 2.9% rate decrease for its auto insurance policies.
Source: National Underwriter (Property & Casualty – Risk & Benefits Management Edition) (05/28/08) Ruquet, Mark E.
I hope that this estimated savings to insurance companies will eventually also benefit the insured in a lowering of insurance premiums. ~ Vera Lang, BeSafeInsure.com
