Car and business insurance costs drop: industry group

NEW YORK (Reuters) - Drivers and businesses in most of the United States will have more cash in their pockets in 2007 and 2008 as a result of lower insurance costs, an industry group forecast on Tuesday.

"Price competition is taking is toll on insurers, but it is a boon for buyers," said Robert Hartwig, president of the Insurance Information Institute.

The III, which gathers statistics for the property casualty industry, said that auto insurance expenditures countrywide were expected to fall 0.5 percent in 2007, the first drop since 1999.

Businesses are seeing price declines of nearly 12 percent, according to the insurance group, while home insurance costs are flat in many areas and up marginally in others.

The only exception, according to III, is in coastal areas likely to be hit by hurricanes, which is where major insurers such as Allstate Corp are cutting back their homeowner policies.

The share of property and casualty premiums relative to the overall economy shrank by 2 percent in 2006 and will probably fall by another 4 percent to 5 percent in 2007 and 2008, the III said.

"The declines in prices are part of a downward trend that began in 2004 and is likely to continue into 2008 and possibly beyond," Hartwig said.

The III said an indication of the fierce competition among property insurers was the increase in advertising expenditures. They rose 24 percent to a record $3.7 billion in 2006 from the previous year, and were more than double what they were in 2001.

(Reporting by Ed Leefeldt)