A number of Mississippi insurance firms are planning to reduce their average automobile rates, while Allstate is planning an average rate increase.On Nov. 12, State Farm Mutual Insurance will reduce automobile insurance rates an average 3.6 percent, saving consumers $12.3 million.
State Farm insures a quarter of Mississippi’s automobiles, approximately 500,000 customers, making it the largest insurer in the state.
State Farm Fire and Casualty, which insures automobiles to high-risk customers, will also decrease rates an average of 4 percent.
Other companies that have received approval from the Mississippi Insurance Department to decrease rates are Travelers with 0.5 percent, and Southern United Fire with 0.03 percent.
Nationwide customers will see no changes in their rates, but on Nov. 19, Allstate will enact a 2.2 percent rate increase.
“Certain companies are reducing their rates and unfortunately a few are raising some,” Mississippi Insurance Commissioner George Dale said, “but overall rates are beginning to inch downward.”
David Majors, State Farm spokesman, said the firm is constantly looking at factors that will allow reductions in average auto rate premiums.
“We’ve had a favorable claim experience in Mississippi, which means that we’ve had few claims admitted and the costs to settle our claims have been favorable,” Majors said.
He said customers can look to see rate reductions on their next renewal dates beginning as soon as Nov. 12.
Majors said not everyone will benefit from the reduction as it is not guaranteed to reach every customer.
“It’s an average rate decrease,” Majors said. “Some people could see more of a decrease and because of other factors some could see rate increase.”
Dale said deciding factors of premiums are the location in which a driver resides, the type of car and age.
Somewhere like Hinds County would have higher rates in comparison to smaller, rural areas because of higher occurrences of auto theft, he said.
“It’s important that you have good law enforcement and crime-free neighborhoods without theft because there is a direct correlation between that and car insurance rates,” Dale said. “Contrary to what the public thinks, rates are not pulled out of the air.”
Ed Duett, professor and chair of insurance, finance and economics at Mississippi State University, said a person’s driving record and type of coverage play a part in premium pricing, but there is another factor that most young people are not aware of.
To get the best rates, students need to have good driving records, Duett said. This means no accidents, no tickets and also a good credit score.
“A lot of people don’t know that these credit scores go into your insurance cost,” he said.
Rates go through cycles and the market is currently softening, availability is better and prices are going down, Duett said.
“You’re talking $36 per thousand cost, so it’s not a huge amount and you’re probably not talking about everybody getting a rate decrease,” Duett said. “Yet it’s a good sign as far as auto insurance prices that they are down.”
He also said young people, males in particular, have higher insurance rates.
Sophomore industrial technology major Chris Barragy said that when he was in high school, he took drivers education and received the “good student discount” by maintaining his grades to keep costs of insurance down.
“Now all I can do is try not to speed or get in wrecks because those are what will hurt you in the long run as far as insurance,” he said.
Barragy said if he receives the discount on his insurance, a huge difference will not be made and only come out to about $2 a month.