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Auto insurance
rates expected
to decline

Insurance chief Wayne Metcalf
says state reforms have
stabilized the market

---

By Rick Daysog
Star-Bulletin

Despite a recent rate increase by one of the isles' biggest insurers, Hawaii's auto insurance market remains stable and premiums will continue to decline, says state Insurance Commissioner Wayne Metcalf.

During briefing with the local media yesterday, Metcalf outlined the state of Hawaii's insurance industry, saying that reforms initiated by the state Legislature in 1997 are paying off in the local auto insurance market.

"We believe that the environment for automobile insurance is stable," Metcalf said. "Overall, everyone is paying 20 percent less."

Metcalf's comments were partly in response to AIG Hawaii's decision last week to raise its rates by an average of 8 percent. AIG, which covers about 20 percent of all cars in Hawaii, attributed the rate hike to a rise in the number of accidents by its customers.

AIG's rates have been among the lowest in the industry and even with the increase, AIG's rates remain among the lowest, he said.

Metcalf said the health of the market can be gauged by the following trends:

Local consumers have seen their average premiums for all forms of auto insurance coverage drop 20 percent since 1997. At the same time, premiums nationwide have risen 8 percent.

Hawaii's auto insurance rates, once the second highest in the nation behind those in New Jersey, now rank 11th highest, according to Metcalf. Hawaii's ranking could drop to 20th in the near future, he said.

The number of uninsured motorists has dropped significantly as coverage has become more affordable.

New insurance carriers have entered the Hawaii market, allowing drivers to shop for the best rates.

During his half-hour briefing, Metcalf also addressed issues affecting Hawaii's workers' compensation market. He said the recent decisions by offshore carriers -- Eagle Insurance, HIH America Insurance Co., and the Fremont family of insurance companies -- to pull out or drastically reduce their isle activities is not indicative of the workers' comp market. Metcalf said the three firms, which have a combined market share of about 10 percent, were forced to pull out due to financial troubles in their mainland operations.

Metcalf noted that local workers' compensation rates have plunged more than 41 percent since the state implemented several wide-ranging reforms in 1995. Insurers are also offering additional discounts and incentives to further bring down the costs.

"The environment in Hawaii for workers compensation remains very, very favorable," Metcalf said.