State survey shows car insurance savings

But industry officials say the report does not compare 'apples to apples'

By Rob Perez
Star-Bulletin

Most Hawaii drivers who have more than minimum auto insurance coverage will see premium savings because of a new state law, Insurance Commissioner Rey Graulty says.

Graulty based his conclusion on a survey of 15 auto insurers who were asked to quote a premium for a hypothetical Oahu driver with a clean driving record and coverage beyond the state-mandated minimum.

The driver, who owns a 1993 Ford Taurus sedan, would see an average decrease of 15.1 percent in his annual premium compared with his July 1996 rate, according to Graulty's figures. In all 15 cases, there were decreases, ranging from 2.6 percent to 41.8 percent.

When insurers who cover high-risk drivers are eliminated from the survey, to make the results more reflective of the mainstream driving population, the driver still would get an average 14.6 percent decrease, Graulty said. The decreases in those 10 cases ranged from 7.6 percent to 28.7 percent.

"This pricing data confirms what many consumers have already learned and what I've said all along - the new law will result in rate reductions even for those needing more than minimum coverage," Graulty said. "From this data, the savings to consumers cannot be simply explained as resulting from reductions in coverage."

But insurers tended to downplay the survey results, saying the coverage between the two years isn't precisely comparable.

Under the law that took effect Jan. 1, rates for minimum coverage were required to go down between 20 percent and 35 percent from July 1996 levels.

The law, however, also changed what is considered basic coverage, making direct comparisons difficult.

"You can't do a valid apples-to-apples comparison," said Robin Campaniano, AIG Hawaii Insurance Co. president.

The driver in July 1996, for instance, got wage-loss protection as part of his standard policy, but that now is considered optional - and has become more costly - under the new law.

Graulty's survey is skewed partly because, among other things, it doesn't have the driver purchase wage-loss protection for his 1998 coverage, insurers said.

Paul Yuen, an Insurance Division spokesman, said wage-loss protection wasn't included because agents have told the division that, at least so far, most people renewing policies under the new law aren't getting it.

If it is included, it can make a big difference in premiums.

AIG Hawaii, for instance, provided an example where a hypothetical driver who gets more than minimum coverage but opts not to get wage-loss protection sees his premium drop about 17 percent from 1996's level. But when wage-loss protection is added, the driver's premium increases 28 percent.

If a policyholder's personal injury protection is made roughly comparable to previous levels and he takes all options, such as wage-loss protection and alternative health care, the premium probably will increase, Campaniano said.

Even Graulty acknowledged that drivers getting excess coverage could see smaller decreases than those indicated in the survey and, in some cases, be hit with premium increases.

Like Graulty, though, Campaniano believes most policyholders will see savings because of the new law and general rate reductions carriers implemented last year.

Because rates vary greatly from company to company, Graulty urges consumers to shop around.