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South Carolina Drivers Paying Less for Auto Insurance Premiums

Sep 26, 2007

By Peter Hull, The Post and Courier, Charleston, S.C.

Sep. 27--The average auto insurance premium paid by Palmetto State motorists dropped in 2005 for the first time since 1999, driven by greater competition, fewer accidents and smaller claims.

South Carolina motorists paid an average $752.56 a year on auto insurance two years ago, according to a study of the most recently available data by the National Association of Insurance Commissioners. That was nearly $77 below the national average and lower than the state's closest neighbors.

In 2004 consumers paid an average $763.35.

The highest rates paid in the nation were in New Jersey, at $1,183.54. The lowest were in North Dakota at $554.30.

The 2005 drop is the first time rates have fallen in South Carolina since the state's auto insurance industry was deregulated. Those changes passed the Legislature in 1997 and took effect March 1, 1999.

The rules were relaxed, in part, to help entice more insurance companies to the state. Under the new law, companies could raise rates by as much as 7 percent without state approval. The growing number of insurers would mean more consumer choice and more stable, if not lower, rates.

Five years on, the recent data suggests the law could be having the desired effect.

Since 2002, rates in South Carolina have ranked in the middle of the pack when weighed against average auto insurance costs nationwide. Further, the number of companies doing business in the state increased from 80 in 1999 to 148 in 2006, an 85 percent increase, according to state Department of Insurance data.

Also, the deregulation of the business gave companies more financial flexibility, allowing them to drop rates if they wanted to generate more customers and increase rates to a certain point when needed.

"When you put all these things in place, competition becomes one of the biggest factors," said Bruce White, spokesman for State Farm Mutual Insurance Co., the nation's largest property and casualty insurer.

In January, State Farm reduced its average premium in South Carolina by nearly 1 percent, saving customers $4.5 million annually, the company said. The insurer also has seen claims volume drop and the amount per claim decline.

Charley Gillespie, a spokesman for No. 3 insurer Nationwide Mutual Insurance Co., added that more customers are buying multiple policies for their homes and vehicles from the same carrier, which drives down overall rates. In those instances, Nationwide customers typically receive a discount, he said.

And the company is writing more liability-only coverage for auto insurance, which is cheaper for the consumer but does not provide as much coverage as costlier comprehensive policies, Gillespie added. Nationwide also has noted a slowdown in the number of accidents, he said.

"There are better customers out there," Gillespie said.


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