Press Release Archives - #419-96 - Creates Auto Insurance Task Force

Archives of the Mayor's Press Office

FOR IMMEDIATE RELEASE
Date: September 6, 1996

Release #419-96

Contact: Colleen Roche (212) 788-2958 or Dwight Williams (212) 788-2972

MAYOR GIULIANI CREATES AUTO INSURANCE TASK FORCE TO INVESTIGATE NEW YORK CITY RATES

Mayor Rudolph W. Giuliani today issued Executive Order 32 establishing a Task Force to investigate insurance rates New York City residents pay for comprehensive automobile coverage. The Task Force will determine whether the rates for comprehensive car insurance in New York City are appropriate, given a more than 50 percent decline in auto theft in the City since 1990.

The Task Force on Insurance Rates will be chaired by Department of Consumer Affairs Commissioner Jose Maldonado. Joining Commissioner Maldonado on the panel will be Police Commissioner Howard Safir; Corporation Counsel Paul Crotty; New York University School of Law Professor Mark Geistfeld; Eugene R. Anderson, a partner in the firm of Anderson Kill & Olick; Barbara Opotowsky, President of the Better Business Bureau of Metropolitan New York; and Stuart Rosenthal, General Counsel for the Greater New York Automobile Dealers Association. The Mayor may also appoint ex officio members as necessary to assist the Task Force. All members of the Task Force will serve without compensation.

"New York City has experienced a steady decline in automobile theft for five consecutive years, yet comprehensive auto insurance rates have continued to rise," Mayor Giuliani said. "It is time to ask why New Yorkers have not benefited from declining auto theft rates. The Task Force, which consists of members of my administration and the New York City business and academic community, will investigate whether current rates are appropriate and will report back to me with recommendations for action."

The Task Force will review the rates and any recent rate changes for insurance coverage in other areas of New York State and compare those rates to the rates charged City residents. If the Task Force makes the determination that the comprehensive automobile insurance rates in New York City do not reflect the recent decrease in the risk of car theft, then the group will propose remedial action on behalf of City residents. The Task Force will report back to the Mayor within 60 days.

Today's announcement follows last week's release of a preliminary report on auto insurance premiums prepared by the Department of Consumer Affairs. The preliminary report revealed that rates paid by New York City consumers for comprehensive automobile insurance do not reflect the dramatic 54% decline in auto theft rates to date since 1990. Among its other findings were:

Between 1990 and 1995 car thefts in the City had an unprecedented drop of 51%, from 146,925 automobiles reported stolen in 1990 to 71,543 reported stolen in 1995, with the most dramatic reductions occurring from 1993 through 1995. Had the number of auto thefts remained constant at the 1990 level, 188,372 additional cars would have been stolen in the years 1991 to 1995. The latest available figures from the Police Department put the five year decline in auto theft at 54 percent.
During the same period, insurance company payments arising from comprehensive auto insurance claims decreased along with auto thefts. The companies paid a total of $429,391,173 in claims in the four quarters of 1990. For the year ending in the third quarter of 1995, insurance companies in New York State paid out $358,170,237 in claims. That represented a decrease of $71,190,936, or 17 percent.
Insurance companies were charging consumers more for comprehensive auto insurance in New York State even as they paid out significantly reduced amounts for claims. Between 1990 and 1994, the average premium for comprehensive auto insurance in New York State rose from $153.52 to $187.36, an increase of 22 percent. This occurred at the very time when grand theft auto was declining in the state, forced down by the reduction in auto theft in New York City.