WASHINGTON—Want some money? Ask your insurer for it.
Longer life expectancy and safer vehicles are driving down payouts for insurance companies. Your insurer—or a competitor—should be able to deliver the same level of protection for less, according to industry analysts.
"It's a good time to shop," J. Robert Hunter, the director of insurance for the Consumer Federation of America in Washington, said Monday. "A lot of companies are marketing aggressively."
The payoff for an hour of comparison-shopping, said Hunter, a former Texas insurance commissioner, could top $100 in the first year.
Many insurers can afford to be generous, having prospered in a year of mild hurricane activity, almost no big payouts for terrorism and high auto-insurance premiums. Berkshire Hathaway Inc., for example, which sells catastrophic insurance and owns GEICO, the huge auto insurer, last week reported more than four times the third-quarter net income it declared last year.
The industry's boom in cash also reflects a multi-year cycle that encompasses aggressive premium increases since 2001 to cover big payouts from catastrophes such as Sept. 11 and Hurricane Katrina.
Lower insurer risks for term life insurance—the kind that pays off if a person dies within a specified number of years, typically 20—should make that product cheaper, too, The Wall Street Journal reported Monday. The reason: Life expectancy was 76.1 years a decade ago in the United States; today it's about 77.9. With Americans living longer, insurers don't need to set aside as much money in reserves to pay claims. They can invest it or reduce their prices and woo new business.
Robert Hartwig, the chief economist for the Insurance Information Institute, a trade group, attributes the decline in vehicle collisions, which also is helping to drive down insurance payouts, to tougher licensing rules for teenagers plus more air bags, wider use of electronic stability control and other vehicle design improvements. Another big factor, Hartwig added, is that "baby boomers are now in their statistically safest driving years."
To profit from the current auto insurance market, Marlys Harris, the finance editor of Consumer Reports, the monthly consumer magazine, recommends that drivers get three quotes, either online or by calling insurance companies. Most people don't shop around, she said. "On average, they shop for auto insurance once every 11 years."
The best Web site for comparison shoppers, according to her magazine's research, is www.insure.com. Shoppers who want to research how readily companies pay claims can spend $26 to join Consumer Reports for a year. They'll find a survey of claims experience in the Personal Finance section of www.consumerreports.org.
Harris said insurers' quotes were merely guidelines; individual policies are set by personal factors, such as driving record, car model, whether children drive the car, past claims histories and credit ratings.
Why credit ratings? "There's an absolutely irrefutable relationship between good credit and safe risk," Hartwig said.
To buyers of term life insurance, Hunter recommends www.term4sale.com, which takes no commissions from insurance companies. Many other sites charge insurers for listings or commissions, so they're often incomplete.
According to The Wall Street Journal, homeowner insurance premiums are down, too, although only about 0.2 percent.
Workers' compensation-insurance costs are down 3.5 percent, the daily business newspaper reported, reflecting the latest phase in a long-term drop in workplace injuries.