Auto Insurance Premiums to Be Hiked Due to Rise in Base Rate

The Insurance Rating Organization of Japan said Tuesday has raised the reference rate of insurance loss costs for cars by an average of 5.7 per cent, paving the way for the property and accident insurers to raise their auto insurance premiums in fiscal 2010.

The growth rate includes 19.9 percent for drivers aged 60 years and older, and 10.3 percent for those under 30, the organization said.

Nonlife insurance companies determine premiums for their insurance policies on the basis of the call rate for advisory loss costs or pure risk premium rates calculated by the organization.

The first attempt to enter the reference rate for auto insurance in nine years is due to increased auto insurance payments to policyholders, which consumed nonlife insurer’s earnings. For example, Mitsui Sumitomo Insurance Co. paid the premium as 73.2 percent for payments to policyholders in fiscal 2008 ended in March.

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