State approves Farmers Insurance rate cut

Journal Record, The (Oklahoma City), Oct 9, 1998 by David Meuser Special to The Journal Record

Oklahomans with cars insured with Farmers Insurance will enjoy a rate decrease next time they renew their policies following action by the State Board for Property and Casualty Rates on Thursday.

The board approved a $4.7 million, or 2.3 percent, reduction in rates. Farmers is the state's second largest writer of personal auto insurance.

Brad Bryant, board rate analyst, said the filing falls in line with other company's recent filings in that the cost of comprehensive coverage is actually falling. "Comprehensive more than any other coverage right now we're seeing a lot of decreases," he said. The Farmers filing was accompanied by a filing from sister company Mid-Century Insurance that raised its overall rates slightly but decreased rates for comprehensive coverage. While Farmers writes the group's preferred customers, Mid-Century covers those with not-so- good driving records. Mid-Century requested a 0.66 percent rate increase, although its figures indicated it could have justified an increase as much as 2 percent. Farmers sought the 2.3 percent reduction although its figures indicated as much as a 7.6 percent reduction could have been justified. Ron Coble, Farmers Oklahoma executive director, said safer vehicles have resulted in fewer and less severe injuries. In addition, low inflation has kept the cost of repairs steady. "We're just pleased to be able to be in Oklahoma and reduce rates," he said. "Oklahoma is a great state for us. We hope to be able to do it in the future if our statistics permit it." Only a few minutes later, the board found itself OK'ing an increase in auto insurance rates for Shelter Mutual Insurance Co. Shelter's rates were increase 3.7 percent, or $1.2 million. Shelter is the eighth largest writer of personal auto coverage in Oklahoma. Like the Farmers filing, the cost of comprehensive coverage was decreased but not enough to make up for increases in other portions of the line. Shelter reduced its uninsured motorist rates 10.2 percent whereas Farmers had an increase of 10 percent. Both companies changed collision coverage less than 1 percent. Farmers lowered rates while Shelter had an increase. While most people with full coverage from Shelter will see a rate increase, those with classic cars will see a 25.3 percent drop in rates, although this only amounts to a $13,824 drop in income for the company. At the same time the overall rates were increased, Shelter got permission to double its three-year Safe Driver Discount from 5 percent to 10 percent. The six-year Safe Driver Discount was increased from 10 percent to 15 percent. In addition, territorial definitions were changed and relativities for rate classes, deductibles and model years were revised. Board member John Marshall questioned Shelter's move to raise rates at the same time its competitors are lowering theirs. Dan Clapp, Shelter's director of pricing, said that since the end of 1994, the number of policies the company writes in Oklahoma has increased 31 percent. "Will this have an effect on our market share in Oklahoma? It's hard to tell." he said. He said the company prefers smaller more incremental increases or reductions over large rate changes. David Meuser is the editor of The Journal Record's Oklahoma Business News division.