Insurance Commissioner Approves 5 Percent Auto Rate Reduction for Auto Club's Insurance Affiliate

LOS ANGELES--June 4, 2004--California Insurance Commissioner John Garamendi today approved an overall 5 percent reduction in auto insurance rates for the Automobile Club of Southern California's affiliated insurance company.

The rate reduction is the first decrease by a major insurer in three years, and should save Auto Club policyholders an average of $90 per policy. The filing is based on a reduction in the number of bodily injury, property damage and collision claims.

At a news conference today, Commissioner Garamendi praised the Auto Club for acting on behalf of consumers and urged other insurers to lower rates.

"We appreciate the Commissioner and his staff acting on our request so promptly," said Thomas V. McKernan, president & CEO. "We get to pass these savings onto policyholders that much faster. Our claims costs have been going down, and when we save money, we want to make sure that our policyholders get the benefit of those savings."

The amount of the adjustment to individual policies will vary, depending upon the type of coverage, applicable discounts and type of car. About 90 percent of policyholders will see a rate reduction. This rate change would become effective on Aug. 1, 2004.

With the newest rate reduction, the Auto Club's affiliated insurance company has reduced rates by nearly 24 percent since 1993.

This rate reduction is on top of the annual premium savings dividend the Exchange has returned to its policyholders each year since 1990. In 2003, policyholders received a premium savings dividend that averaged 9.5 percent, or approximately $152 per policy.

"In addition to reduced claims costs, we've continued to work hard at reducing operating costs and improving efficiency," McKernan added. For the second consecutive year, the Exchange was ranked second in the nation in 2003 for overall customer satisfaction by a leading consumer satisfaction study.

Also, the 2003 Ward's 50 Benchmark Group selected the Exchange as a top industry performer for the tenth year in a row. The Benchmark Group recognizes insurance companies that have excelled at balancing safety, consistency and performance over a five-year period and benchmarks their performance against the industry as a whole.