News Column

AAA to Cut Auto Insurance Rates

May 23, 2013
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About 1 million customers of the Automobile Club of Southern California will get an average $65 reduction in their annual car insurance bills, the auto club and the state Insurance Department announced.

The total rate cut for all motorists came to $70 million, or 4.1%, for policies that start or renew after July 1.

It was the fourth such reduction in the last nine years that collectively saved policyholders more than $380 million, Auto Club Chief Executive Robert T. Bouttier said Wednesday.

The latest rate cuts, which were approved by California Insurance Commissioner Dave Jones, include a number of new discounts for homeowners, college alumni group members, medical professionals and some students, Bouttier said.

The auto club is the fourth-largest auto insurer and the sixth-largest homeowner insurer in California, according to A.M. Best, which provides statistics and analysis to the industry.

Rates have been coming down over the last decade, auto club spokesman Jeff Spring said. Reasons include safer cars, fewer and less severe claims and a general reduction over time in the number of miles driven by policyholders each year.

Jones praised the auto club for putting its "policyholders interests first."

Auto insurance rates in California are tightly regulated by the elected insurance commissioner. Voter approval of Proposition 103, a 1988 initiative, gave the commissioner the power to approve or deny rates before they take effect.

A group founded by the author of Proposition 103, Harvey Rosenfeld, said it participated in the rate-setting process and successfully challenged some costs the auto club claimed as offsetting business expenses.

"California's insurance reform laws were written to ensure that we don't overpay for insurance," said Pamela M. Pressley, a lawyer for advocacy group Consumer Watchdog in Santa Monica.


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