by Josh Chetwynd
When it comes to bundling insurance, the Northeast generally delivers the smallest average premium discounts in a number of areas, including car and homeowners combinations and auto and condo packages, according to a new study.
The report, which was tabulated by Quadrant Information Services on behalf of InsuranceQuotes.com, found that New York was the second-worst state when it comes to premium discounts for auto and homeowners insurance, showing just an 11% reduction. New Jersey was also low on the list, placing fifth-worst with just a 12% discount.
In terms of car and condo insurance combination, Virginia (7% discount) was the worst, with Rhode Island (7%) 2nd-worst, New York (8%) 4th and Connecticut (8%) 5th from the bottom.
Despite the seeming trend in the region, James Lynch, chief actuary and director of research information services for the nonprofit Insurance Information Institute, cautioned that it is a complicated formula that leads to these differences in rates.
“This discount is just one of many factors that goes into setting a rate,” Lynch said as part of InsuranceQuotes.com’s report. “So it might be that insurers in one state are raising prices on auto policies this year while at the same time offering a larger discount for bundling. Insurers in another state might be doing the exact opposite.”
Nevertheless, Eli Lehrer, president of the nonprofit research organization The R Street, said that bundling is an effective tool in selling policies.
“Bundling insurance saves money on processing, administration and selling costs for insurers, so it’s good business sense to encourage customers to do it by sharing some of the savings with them,” he said in the report. “[A] customer who bundles two products is almost certainly more likely to buy a third. It’s all a beneficial model.”
