Re: “It’s time to fix Illinois’ auto insurance market,” Joe Cahill, (July 22):
Recently the Illinois Department of Insurance issued a comprehensive financial information-related “data call” for Illinois-specific automobile insurance premium information for the purpose of publishing that information on an insurer-specific basis. Despite lacking, we believe, appropriate legal authority to publicize this information in a way that protects the privacy and confidentiality of the individual insurers’ information, the department has compelled insurers to provide this information; and insurers, despite their misgivings about the lack of confidentiality and privacy protections normally afforded to them, have done their best to comply with this directive and have provided relevant financial data for the years 2019-21.
The publication of this data has automobile in calls by anti-insurance industry critics for retroactive insurance premium refunds, in addition to the more than $14 billion in premium giveback programs and credits that were provided by insurers to their customers in 2020 during the COVID- 19 pandemic crises. In addition, insurers gave more than $220 million in philanthropic contributions during COVID to support local communities.
The critics only focus on the short-term period when driving declined, but it is important for stable and accurate insurance pricing to do what insurers and most regulators have always done and look at the long-term patterns impacting driving and loss trends. The volatility of responding to short-term trends would create instability both for consumers and insurers. This could mean uncertain fluctuations for consumers and the inability to count on stability for budgeting purposes.
An analysis of highway driving data shows that at the onset of the pandemic, miles traveled declined sharply but quickly returned to pre-pandemic levels. Additionally, driving habits changed during the pandemic and they continue to show that more dangerous driving habits have emerged.
Despite people driving less during the worst of the pandemic, those on the road are driving more dangerously. The US Department of Transportation’s National Highway Traffic Safety Administration 2020 annual traffic crash data shows that 38,824 lives were lost in traffic crashes nationwide. That marks the highest number of fatalities since 2007.
In Illinois fatalities rose 18.3% from 2019 to 2020; this increase was more than twice the national average of 6.8%.
It is critical to note that in comparison to other states, Illinois’ auto insurance consumers continue to benefit from a healthy and very competitive marketplace. Even though 88% of Illinois’ population is in urban areas and the state has the third-most-populated city in the nation, Illinois drivers, on average, pay just the 33rd-highest price among the states and DC for personal auto insurance.
This is extremely beneficial to Illinois auto insurance consumers considering, as the National Association of Insurance Commissioners explains: “Automobile premiums tend to be higher in urban areas. Therefore, those states with a higher percentage of population in urban areas will tend to have higher average premiums.”
On average, Illinois’ personal automobile insurance premiums have long been in the middle tier (or middle third) of the nation. Its latest (2019) annual full coverage premium of $1,017, reflecting liability and physical damage (collision and comprehensive) coverages, is 15.5% lower than the countrywide average of $1,204.
There are about 230 companies offering personal auto insurance in this state, with no one insurance company or group dominating the market. The Herfindahl-Hirschman Index, a commonly accepted measure of market concentration, indicates Illinois’ personal auto insurance market is not concentrated and is very competitive. With an index of 948, the personal auto insurance market in Illinois is a healthy one in which many different companies operate to provide a wide array of auto insurance products and services to consumers.
Insurers strongly encourage drivers to minimize their risk by avoiding risky driving behaviors that may result in a crash. Insurers will continue to advocate for better infrastructure, including reliable supply chains for critical auto parts and safer roads, to help keep insurance premiums affordable for consumers.
The American Property Casualty Insurance Association, the Illinois Insurance Association and the National Association of Mutual Insurance Companies remain dedicated to additional measures to help control consumer costs, such as reforms for lawsuit abuse, auto body repair and medical billing.
STEPHEN C. SCHNEIDER
Vice president of government relations
American Property Casualty Insurance Association
KEVIN J. MARTIN
Illinois Insurance Association
Regional vice president of state affairs
National Association of Mutual Insurance Companies