FOR IMMEDIATE RELEASE
NEW YORK, November 12, 2013 — A competitive market, less litigation and safer vehicles have made auto insurance coverage in California, and elsewhere, more affordable for drivers, according to the
Insurance Information Institute (I.I.I.).
The I.I.I. made the observations in response to a report issued today by the Consumer Federation of America (CFA), which left the impression Proposition 103 was the most significant reason for this trend.
“The Insurance Information Institute calculated last year that annual auto insurance expenditures for the typical U.S. driver rose only 4.2 percent between 2002 and 2012, even as the Consumer Price Index (CPI) over these same 10 years grew by 27.6 percent,” stated Dr. Robert Hartwig, president of the I.I.I. and an economist.
Indeed, the
Insurance Information Network of California has noted that, since the passage of Proposition 103, several factors having nothing to do with the issues raised in that statewide ballot referendum have played a significant role in the stabilization of California’s rates. They include:
- The California Supreme Court decision in 1988 to overturn its own 1979 ruling (Royal Globe), which previously allowed third parties to sue auto insurers directly for bad faith. As a result, auto-related lawsuits fell from 91,000 in 1988-89 to 42,000 in 1998-99;
- In 1990, the fatality rate on California’s highways was two people per every 100 million miles driven. In 1999, it dropped to 1.19 persons. By 2011, the number of fatalities per 100 million miles driven dropped to an all-time low of 1.1 persons;
- In 1996, California voters passed Proposition 213, the “no pay, no play” initiative. Under the law, uninsured motorists can receive only actual damages—medical, lost wages, etc.—and no pain and suffering compensation for injuries suffered in an auto accident caused by an insured driver;
- Safety advances such as airbags, tougher enforcement of drunken driving and governmental crackdowns on auto insurance fraud, have also contributed to reducing claim costs.
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Insurance Information Institute, 110 William Street, New York, NY 10038; (212) 346-5500; www.iii.org