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

Jul. 7--TOKYO -- The Non-Life Insurance Rating Organization of Japan said Tuesday it has raised its reference loss cost rate for automobile insurance by an average 5.7 percent, paving the way for property and casualty insurers to raise their auto insurance premiums in fiscal 2010.

Increases in the rate include 19.9 percent for drivers aged 60 and older, and 10.3 percent for those under 30, the organization said.

Nonlife insurance companies determine premiums for their insurance policies based on reference loss cost rates or advisory pure risk premium rates calculated by the organization.

The first hike in the reference rate for auto insurance in nine years is due to increased auto insurance payments to policyholders which have eaten into nonlife insurers' earnings. For example, Mitsui Sumitomo Insurance Co. paid as much as 73.2 percent of premiums for payments to policyholders in fiscal 2008 ended in March.