Albuquerque's auto theft epidemic isn't causing insurance rates to skyrocket in New Mexico. That's because the state has an open and competitive market and insurers can't afford to raise their rates too much.
There has been speculation that because Albuquerque is now the auto theft capital of the nation, auto insurance rates will skyrocket.
Well, it’s not true.
Rates for comprehensive coverage in the state are expected to increase by an average of 7 percent this year, according to New Mexico Insurance Superintendent John Franchini.
That’s because there are 150 companies that write auto insurance in the state and they can’t afford to raise their prices too much or motorists will go to their rivals, Franchini said.
“We have a very open and competitive [auto insurance] industry here,” Franchini told ABQ Free Press.
Franchini added that when it comes to comprehensive coverage, insurance companies can pay 69 cents in claims for every premium dollar they make and still break even.
“It’s a very efficient industry,” Franchini added.
But that doesn’t mean that insurance companies can absorb such high claims payments forever. The amount of money the firms pay out in claims is called the loss ratio. And for companies in New Mexico, it has been climbing.
In 2013, the average loss ration was 61 percent, meaning that for every dollar they received in premiums, the companies paid 61 cents in claims. In 2014 the loss ratio was 72 percent, and in 2015 it was 83 percent, Franchini said.
So with those loss ratios increasing, Franchini’s office has joined forces with police departments and district attorney’s offices across the state to develop a plan to curb auto thefts in New Mexico.
It’s called the Auto Theft Authority, and it will be housed in the Office of the Superintendent of Insurance’s fraud bureau, Franchini said. He added that the Auto Theft Authority is expected to be operational by the end of the summer.
“We’re working to find ways to reduce auto theft in the state,” Franchini said.
Franchini said that while some auto insurance companies have asked his office for double-digit increases, they are small and don’t have much of the market in the state.
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