Cuts in Claims Tied to Lower Insurance Premiums

Cutting the costs of claims is the only way to reduce automobile insurance premiums paid by Californians, according to a state Department of Insurance survey.

The study, based on analysis of about 40,000 claims paid last year by the state’s 11 largest auto insurers, concluded that between 1985 and 1989, for every dollar of insurance premiums paid, auto insurance firms in the state earned an average of $1.07 in revenue. But, the survey said, 85 cents went to pay claims and related expenses, and 23 cents was used to pay insurance company expenses, totaling $1.08.