Tennessee Auto Insurers Raising Rates after Jan 1

Posted & filed under Car Insurance News.

Drivers in Tennessee will be seeing increased auto insurance premiums in 2010, and not just from one insurance company. Some of the best-known companies in the industry have raised their rates, in some cases in excess of the 4 percent average that represents rate hikes nationwide.

Specifically, the increases, which must be approved by the state’s Department of Commerce and Insurance review board, include a 6.5% average increase from Allstate and GEICO, while State Farm has requested a mere 0.8%, to take effect in February, for new customers, and March for those renewing their policies.

According to Insurance Information Institute president Robert P. Hartwig, car insurance rates have risen about 4% nationwide in the last six months. He explained, “Costs of premiums could rise simply because costs of the ingredients — all of the inputs into the policy — have risen.”

In addition to those factors, insurers are also relying on income from premiums to cover losses as income from investments has decreased. Some insurance industry experts predict that such losses will continue to expand even as the overall economy improves, because consumers will once again increase their drive-time, thus increasing the potential for accidents.

What does all this mean for residents of the “Volunteer State?” Some Allstate Indemnity customers could see the premiums of their individual policies increase by as much as 11.3 percent next year, though that only represents a small portion of Allstate’s total market share in Tennessee. The bulk of its clients in that state have policies from Allstate Property & Casualty Insurance Co, and Allstate Insurance Co., rather than the Indemnity line, according to company spokesperson Allison Hatcher.

While the customers of Allstate Indemnity are seeing the largest rate increase, the other 90% of Allstate clients in Tennessee may see increases as well, of up to 5.2%, in mid-January (new policies) and mid-February (renewals).

Ms. Hatcher explained, “Like many other insurance companies, we track losses in various territories and across the state,” Hatcher said. “Based on the losses, we adjust as needed.”

Allstate policyholders are not alone in their rate hikes, however. GEICO Indemnity, which serves high-risk drivers, is also increasing rates. Their increase of 6.5% kicks in on January 21, with the less risky customers of GEICO General Insurance and Government Employees Insurance seeing smaller increases of up to 3%, statewide.

Alfa Alliance Insurance Corp is also increasing rates in Tennessee – their 6.5 percent increase was recently approved.

Industry experts say that drivers with poor driving records are likely to see higher rate increases than those whose records are clean.