National Study Shows Pennsylvania Auto Insurance Consumers Benefit from Competitive Market

A national study by the National Association of Insurance Commissioners (NAIC) has indicated Pennsylvania auto insurance consumers continue to benefit from the state’s competitive market, with average premiums remaining below the national average, acting Pennsylvania Insurance Commissioner Jessica Altman announced in a press release.

The report covers the period from 2011 through 2015, showing that average premiums in Pennsylvania have risen less than the U.S. average during that time.

The report shows Pennsylvania’s average premium in 2015 was $971, which is 3.8 percent below the national average of $1,009. In addition, premiums increased on average by 7.3 percent in Pennsylvania over the four-year period, while the national average increase was 11.1 percent. Drivers in Pennsylvania also had the second-lowest premium compared to the six states that border Pennsylvania, with the average premium being 15.8 percent lower than the $1,152 average of the six bordering states.

“We have more than 200 companies writing auto insurance in Pennsylvania, so all Pennsylvanians do have access to a competitive market,” Altman said in the release.

Pennsylvania’s average auto premiums remain below the national average despite the state having the 18th highest percentage of population living in metro areas, the 17th highest miles driven per mile of highway and the 9th highest population density in the country.

Altman stated in the release that the Wolf Administration has taken actions to prevent unfair premium hikes. These include making clear the widow’s penalty, in which a surviving spouse’s premium is increased solely because the person is now a widow or widower, is not permitted.

The administration also issued a notice to insurers it will not approve rate filings that include price optimization. This is when sophisticated pricing tools are used to charge different premiums to policyholders who present essentially the same risk to the insurer, with the price differences based on whether a particular policyholder is likely to shop around for coverage.

The NAIC report noted states have different auto insurance laws, such as how much coverage drivers must carry and whether options such as limited tort, which restricts drivers’ ability to sue for damages in certain instances, are available. These differences impact premiums, the report said.