Friday, December 01, 2006

State Farm lowers car insurance rates in Arkansas

LITTLE ROCK - The state's largest car insurance provider lowered its Arkansas rates by an average of 4.4 percent this week in a move meant to reflect falling claims.

The latest rate reduction by State Farm Mutual Automobile Insurance Co. is expected to save customers $13.4 million annually.

Including the rate change Monday, State Farm rates have decreased 13.4 percent on average over the past three years in Arkansas, the company reported.

"Rates are made with regard to future expectations and so we felt it was appropriate to reduce our rates at this time," company spokesman Gary Stephenson said.

Fewer claims have been reported relative to the number of policies the company issues in Arkansas, Stephenson said. The same trend has been seen in a number of other states in which the company does business, he said.

Instead of pocketing the higher yield, State Farm is passing its savings along customers.

"We're essentially owned by our policyholders, so when we are able to satisfy our operational requirements, we don't need as much premium income as we anticipate to cover operations and other expenses," Stephenson said.

On average, premiums for the collision coverage decreased the most, according to the company. Liability and medical payment coverage costs also are declining.

Meanwhile, the cost of comprehensive coverage - which covers theft, storm damage, fire, vandalism and glass breakage - will rise for most customers, the company reported.

The variables that rates depend on, including the driver's age, the car and coverage, make it impossible to compare insurance providers' rates in general, industry officials said.

Progressive Direct Auto Insurance, Arkansas' seventh largest auto insurance provider by premiums collected, increased rates in June by 1.8 percent, said spokeswoman Cristy Cote, noting that did not necessarily mean Progressive's rates are higher than State Farm's.

Officials for Allstate and Nationwide Mutual Insurance Company, Arkansas' fourth and sixth largest auto insurance providers in terms of premiums collected, respectively, did not immediately return calls seeking comment Thursday.

Cote encouraged consumers to shop around.

"When there's rate changes it signals that there's movement and it's a good time to go see what's out there," she said.

By Jason Wiest
Arkansas News Bureau


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