Insurance regulators in the state of New York announced last Wednesday that they have ordered car insurance companies to consider that New Yorkers are driving less because of high gas prices, before they are allowed to request rate increases.
In response to the order, GEICO, which is responsible for about a fifth of the Empire State’s $10 billion in annual auto insurance premiums, agreed to forgo pending increases for most of its customers in New York, as well as reducing their requests for rate hikes for those remaining.
State Insurance Superintendant Eric Dinallo said, in his statement to the press, “Paying more to gas up your car may mean paying less to insure it. Higher gas prices lead to less driving, and as New Yorkers drive less, the number of accidents should go down.”
In fact, New Yorkers drove 4% less in May 2008 than in the same month in 2007, which amounted to a reduction of roughly 500 million vehicle-miles, according to federal officials. State insurance officials estimate that insurance companies should save between $120- and $420 million a year in claims, based on that change.
Dinallo said that he expects most of the 48 pending rate increase requests to be cancelled or withdrawn.