Car insurers
to drop rates

Fifty-five percent of the
state's auto insurers are set
to drop rates 21%

By Russ Lynch
Star-Bulletin

The cost of automobile insurance in Hawaii will drop 21 percent as the majority of the state's insurance companies and others are expected to make significant reductions by the end of this year, the state insurance commissioner said today.

Wayne Metcalf said that the savings proposed by the industry's rating organization, the Hawaii Insurance Bureau, comes on top of the 20-35 percent reduction mandated by 1997's insurance reform legislation.

The HIB represents 55 percent of the auto insurers in the islands. Metcalf said he has ordered all companies to post new rates by mid-December and if he doesn't see significant reductions across the board he will exercise his power to order them.

"While every driver is unique in his or her own driving situation and that's why everyone's policy cost is different, all indicators are pointing to continued decreases in the costs of purchasing motor vehicle insurance in the near future," Metcalf said.

"These indicators are not just for the members of the bureau (HIB) but across the board, for all insurers," he said.

Metcalf said several major companies filed rate reductions already, since a new law went into effect in January 1998, reducing requirements such as the minimum for personal injury coverage and making it possible for the insurers to increase their profits.

Hawaii`s auto insurance market was the most profitable in the nation in 1996 and 1997, according to the Auto Industry Report, an independent newsletter.

Metcalf said there has been enough experience of the new law now to tell whether it is bringing down costs for the insurers and "very clearly we believe that it is and we believe that substantial rate reductions are in order."

The HIB, which represents insurance companies and agencies in the property and casualty business, proposes insurance rates for its members based on current claims and cost experience. Some insurance companies also separately filed their own rate cuts.

State Farm Mutual Automobile Insurance Co., which is not an HIB member, has cut its rates 10 percent, Metcalf said. However, a spokeswoman for State Farm, the state's largest auto insurer, said later that Metcalf apparently wasn't counting a 15 percent decrease effective Jan. 1, 1998.

"In essence, we've already done what he is asking the carriers to do," said Carolyn Fujioka said.

First Insurance Co. brought its rates down 14 percent and other major companies dropped rates up to 5 percent. Those cuts will be taken into consideration when deciding what they should now be charging, Metcalf said. But the fact that HIB members make up so much of the industry and they can cut rates 21 percent means significant reductions are in order at other companies, he said.

Metcalf issued an order Aug. 17 requiring the insurance companies to file new rates by Dec. 15 reflecting their cost savings made possible by the insurance reform.

Metcalf said he hopes competition in the marketplace will cause insurers other than the HIB members to cut rates, but if they don't he is prepared to act.