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GOV. CASEY SAYS MAJOR PENNSYLVANIA AUTO INSURER WILL REDUCE RATES,

   GOV. CASEY SAYS MAJOR PENNSYLVANIA AUTO INSURER WILL REDUCE RATES,
         POSITIVE PROOF' THAT INSURANCE REFORM LAW IS WORKING
    HARRISBURG, Pa., Nov. 1 /PRNewswire/ -- Gov. Robert P. Casey today announced a rate reduction and freeze by two of the state's largest auto insurance underwriters and hailed the move as "positive proof that Pennsylvania's insurance reform efforts are working."
    Casey said the Erie Insurance Co. will reduce rates an average of 4.8 percent on policies purchased or renewed after Jan. 1, 1992, while Erie Insurance Exchange will freeze its rates next year.  The companies are subsidiaries of Erie Insurance Group.
    Both actions have been approved by the state Insurance Department, the governor said.
    Erie Insurance Exchange is the state's fourth largest writer of private passenger automobile insurance with 845,000 cars insured; Erie Insurance Co. is the sixth largest with 85,000.
    Both companies would have been eligible to apply for rate increases on July 1, 1992, tied to the consumer price index, under Pennsylvania's auto insurance reform law which Casey signed in February of last year.
    The new law also mandated immediate rate decreases and set in place reforms designed to halt the spiraling cost of auto insurance.  The law gave motorists more flexibility to tailor their insurance to their actual needs, including the choice of a limited tort option aimed at reducing the number of costly lawsuits.
    The consumer price index allowed companies to raise auto insurance rates July 1 of this year by 5.68 percent for full tort and 3.26 percent for limited tort coverage.  Casey noted that prior to enactment of the law, rates were rising 10 and 20 percent a year.
    Casey said Erie Insurance Group's decision to reduce or freeze rates in a year when they could have sought higher premiums "shows we've broken the cycle of skyrocketing increases for auto insurance in our state, and the bottom line is real savings for Pennsylvania motorists."
    "I'm pleased particularly that the Erie Insurance Group is the first underwriter to voluntarily freeze or lower rates, because they've played the role of market leaders in the past," Casey said.  "We expect other companies to follow Erie's lead in the very competitive Pennsylvania auto insurance marketplace.
    "The Pennsylvania reform experience is in marked contrast to other states where drivers are forced to pay skyrocketing rates as insurance companies confront rising legal, medical and car repair costs.  And in some states, insurers are pulling out of the auto market altogether simply because they can't keep pace with out-of-control costs."
    For the Erie Insurance Co., motorists who opt to limit their right to sue in minor accidents will receive an average 7.9 percent decrease, while those who keep their right to sue under any circumstance will receive an average 3.8 percent decrease.
    Under the limited tort option, motorists retain their right to sue uninsured motorists, drunk drivers or drivers of out-of-state vehicles; to recover any out-of-pocket expenses; and to recover for more than out- of-pocket expenses, such as "pain and suffering" damages, when his or her injuries are serious as defined by law.
    The limited tort elector may not sue for more than out-of-pocket expenses when injuries are not serious.
    Motorists who wish to change from full to limited tort may simply notify their insurance agents or companies at any time.
    Casey said the state's insurance reform law saved Pennsylvania motorists at least $400 million in premiums in its first year of existence, mostly through medical cost containment provisions.
    "The new law succeeded in rolling back rates an average of nearly 6 percent for those who maintained the full tort coverage and 18 percent for those who opted for limited tort," the governor said.
   "Today, Pennsylvania has an auto insurance law that gives consumers a real break for the first time," Casey said. "This law has been a true success story because we did what we said we were going to do.
    "Insurers have saved substantially, and consumers have seen the benefits of those savings.  Consumers have been given the freedom to select their coverages and are benefitting from initial and sustained savings.  Our record of success should only continue to grow in the future."
    /delval/
    -0-                           11/1/91
    /CONTACT:  Spike Lukens of the Pennsylvania Insurance Department, 717-787-3289, or John L. Taylor of the Commonwealth News Bureau, 717-783-1116/ CO:  Erie Insurance Group ST:  Pennsylvania IN:  INS SU: LJ -- PH016 -- 0185 11/01/91 11:32 EST
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Publication:PR Newswire
Date:Nov 1, 1991
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