Insurer’s rate hike request denied
Friday, Oct. 29, 2004 | 10:58 a.m.
CARSON CITY -- Nevada Insurance Commissioner Alice Molasky-Arman rejected the Progressive Corp.'s request to raise auto rates in Nevada by an average of 5.3 percent.
She said Thursday, "The documentation submitted indicates that based on the companies' past losses and expenses the (current) rates are substantially adequate."
About 52,000 vehicles in Nevada are insured by Progressive Northwestern Insurance Company, Progressive Casualty Insurance Company, Progressive Specialty Insurance Company and Progressive Preferred Insurance Company.
Chuck Knaus, an actuary with the state's insurance division, said an analysis shows that the company, under the present rates, could make a 15 percent return on equity next year.
Molasky-Arman said Progressive assumed that the average premiums would continue to decrease while the losses would continue to increase. She said she rejected that idea based on the consistent profitability of these companies in the past.
She said there was a lack of compelling evidence that the average premium per policy will drop.
Knaus said one practice of insurance companies is to offer discounts to good drivers. And as these motorists continue to have accident-free records, their premiums go down. But Knaus said that also means the losses should drop.
"The negative premiums are offset by the lower losses," he said. "Everything should be in balance."
The companies can ask for reconsideration or submit a new application for a rate increase. Knaus said he expected to the companies to refile their request with added documentation.
The Progressive companies received an average 1.9 percent rate increase in January for renewal business.
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