May 9, 2008 
MSN Money published a Marketwatch article titled “States that keep a Lid on Car Insurance”
Saith the wise people of Marketwatch:
” California … New Jersey, Hawaii, New Hampshire and Pennsylvania also have served drivers well by keeping insurance rates relatively low, but drivers in other states have watched their costs skyrocket 100% or more between 1989 and 2005, the CFA says.”
Other states skyrocketed .. sounds terrible. What’s particularly interesting to me is the states listed are some of the higher car insurance premium states in the country. Intrigued I read on:
“Nationwide, the average cost of auto insurance jumped 50% from 1989 to 2005, but average per-car spending on coverage rose just 13% in California, according to the federation’s report.Other states where price increases were held down, relatively speaking, included New Jersey, with a 20% increase over that period; Hawaii, 25%; New Hampshire, 30%; and Pennsylvania, 31%. Rates in New Jersey, Hawaii and Pennsylvania, however, were above the national average, and New Hampshire’s weren’t far behind.
States with the steepest rate changes were Nebraska, where average per-car costs surged 118% to $620 from $285 over the 16 years ending in 2005, and South Dakota, where costs jumped 107% to about $565 from $274. Still, those averages were lower than the $845 in California.
Other high-increase states included Montana, 104%; Wyoming, 101%; and Kentucky, 100%. Wyoming does not control rates, and the four other states require companies file notice of rate changes but don’t require state pre-approval of those changes.** ”
Boy it sounds like lack of regulation are killing the poor people in Nebraska and saving money for Californians. End of story.
But wait, Marketwatch goes on to publish the average car rates in Nebraska and California:
1989 Average 2005 Average
CA $747.97 $844.50
Ne $284.86 $620.60
So, in 1989 California’s average auto premium was 262% higher than Nebraska’s. But due to the diligence of the California DOI, now it’s only 136% higher? Wow great job government regulators.
IMHO, most insurers would leave California IF the population wasn’t huge. 36 Million people!
BTW, Nebraska has higher minimum limits of liability and property damage than California (25/50/25 vs 15/30/5). Also Nebraska does not allow rejection of UM/UIM coverage. This skews the averages even more in Nebraska’s favor.
This is not limited to CA and NE. All the states listed as ‘regulated’ have average premiums way above the national average.
So, more coverage, less premium. I can see how Marketwatch thinks market forces don’t work in Auto Insurance. Will the last insurance company in New Jersey please turn off the lights when they leave?
Marketwatch should hire someone with a calculator.
** Editors note: KY actually requires prior approval IF the premium increase requested is above 25%.
