AUTO RESIDUAL MARKET LOSSES RISE

The Property Casualty Insurers Association of America reported that residual market plans for private passenger auto insurance continue to result in significant losses. The private passenger auto residual market increased from 1.5 percent of premiums nationwide in 2000 to 1.8 percent in 2001, reversing an annual decline in the residual market share since 1992 when it was at 5.6 percent. In the majority of states, the market share is less than 1 percent, but seven states have more than the average market share. In North Carolina, it’s 15.4 percent and in Massachusetts, it’s 11.2 percent. “While the residual market share has remained fairly low over the past few years, the loss ratio in 2000 and 2001 skyrocketed,” said Roger Kenney, PCI’s assistant VP of research. The loss ratio decreased somewhat from the record level of 181.8 in 2000, but the loss ratio of 146.1 was still 75 percent higher than the loss ratio for the private auto industry in 2001. New York, in particular raised concerns because of its high loss ratio of 156. The residual market plans in nine states (Florida, Hawaii, Maryland, Massachusetts, Michigan, Missouri, New Hampshire, North Carolina and South Carolina) generated an underwriting loss of $596 million in 2001.