State Farm Mutual Automobile Insurance Co. said Monday that it will cut auto-insurance rates in Colorado an average of 7.5 percent starting next week, saving drivers $42.9 million in premiums a year.
That works out to a savings of about $50 a year spread across the 858,000 policies underwritten by the largest auto-insurance provider in the state, although the savings will vary by policy.
“The move away from a no-fault and to a tort environment has helped us,” said State Farm spokeswoman Teresa Tuschhoff. “We have taken abuse, misuse and overuse out of the system.”
Since the state switched from no-fault insurance in July 2003, State Farm’s auto rates have fallen 35.9 percent, the company said.
But critics say the savings result from shifting costs to the health-care system, delaying payouts to injured parties and providing reduced benefits.
“You are overpaying for what you are getting,” said state Rep. Morgan Carroll, D-Aurora. “Benefits have been gutted tremendously.” She also said there are some insurers who have not lowered premiums.
Under no-fault, each party’s insurance paid for damages and injuries regardless of fault. Under the tort system, the insurance of the at-fault driver pays.
When pushing for changes, the insurance industry forecast premium decreases of 20 percent to 30 percent.
Three years in, savings have passed those estimates and premiums continue to fall, said Carole Walker, executive director of the Rocky Mountain Insurance Information Association.
“Three years ago, we were talking about double-digit rate increases,” Walker said. “We are now talking about double-digit rate decreases.”
Effective immediately, USAA, another of the state’s top five insurers, is cutting auto-insurance rates an average of 14.8 percent in Colorado Springs and 18.5 percent in Denver-Boulder, said John Henry, a spokesman with the San Antonio company.
Since July 2003, USAA auto-insurance rates in the state are down by 51 percent, Henry said.
American Family Insurance, the state’s third-largest provider, cut rates 10.7 percent in January and expects another premium decrease when it sets auto rates early next year.
“We are looking at loss information for the year, and we are anticipating another rate decrease come January,” said Ken Muth, a spokesman for the Madison, Wis.-based insurer. He estimates the company’s auto premiums are 39 percent lower in Colorado now than under no-fault.
Although milder hailstorms the past two years and safer autos have helped reduce claims, the shift to a tort system is why rates are falling, Walker said.
A survey by the RMIIA found that between June 2003 and May 2006, an auto-insurance premium with collision and comprehensive coverage for a 2001 Ford Taurus was down 26.7 percent in Denver, 22.7 percent in Colorado Springs and 19.3 percent in Grand Junction.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
