Many analysts are predicting that insurance premiums will remain flat in 2011 — maybe even go down. That’s a relief to consumers who are seeing everything else go up, from gasoline to a loaf of bread.

The reason for lower car insurance rates: A decline in crashes and insurance claims, which have helped drop premiums by one or two percent a year from 2004 through 2009, according to data from the National Association of Insurance Commissioners. Also, consumers are doing a better job of shopping around and taking advantage of lower-cost providers.

“When the number of accidents goes down, fewer claims are filed, and that’s one of the two main drivers of auto insurance rates,” said Brian Sullivan, an insurance analyst and editor of the Auto Insurance Report newsletter.

The business of forecasting auto insurance rates can be a tricky one. For starters, insurance analysts have to sift through many indicators when making such forecasts, like the total number of crashes, the number of fatal crashes, the number and dollar amounts of insurance claims, average highway miles driven, the state of the economy, the cost of medical care and car repairs, improvements in auto safety technology — the list goes on.

Sluggish Economy Means Less Driving

Many of these indicators are presently in flux, or moving in different directions. For example, due to the state of the economy, people are driving less, resulting in fewer insurance claims. The number of fatal accidents has been falling for a few years, but medical costs and repair costs are up. The incidence of auto insurance fraud has risen after several years of decline, but tort reform in some states has put a cap on the dollar amount that juries can award to plaintiffs in crash-related lawsuits. The rapid advance of high-tech safety features in vehicles has also helped reduce fatal crashes and serious injuries.

Since the recession began in ’08, a lot of people have lost their jobs, or their income has decreased significantly. So people have been using their cars less than ever, which has clearly led to fewer crashes and fewer claims. “Insurers could afford to charge less,” said Jeremy Bowler, an analyst at J.D. Power & Associates.

If the economy improves, and people start driving more, one might presume that premiums would go up. But, says Sullivan, the economy was strong in 2004-2005, and premiums went down even then.

While distracted driving has been a huge issue in the media, Sullivan says using cell phones and texting while driving has not translated into an increase in crashes or had an effect on insurance premiums. “It would seem to make sense that engaging in these activities would indeed be a big distraction for drivers, but the data just isn’t there to show that the number of crashes are up as a result,” he said.

The Geico Gekko

Another catalyst in the recent drop insurance rates has been the phenomenal increase in the amount of advertising done by insurance companies, particularly Progressive and Geico, said Bowler. “Those ad campaigns have created tremendous awareness in the minds of consumers. The message they constantly hear in all those ads is that you should price shop,” he said. “So, that results in a drop in rates as well, because consumers are have been doing more price-shopping.”

Whether you get a better rate if you make a habit of price-shopping and change insurers every few years, or if you stay with one company for a long time is a point of contention.

“It’s definitely a good idea to shop a bit, although it’s not something people want to spend a lot of time doing,” says Sullivan. “I would say that the best thing to do is seek personal recommendations — ask your friends and neighbors who they use, what they’re paying, and if they’re happy with the service.”

On the other hand, some companies offer discounts if you’ve been with them for a long time. The data shows that there’s a correlation between the length of time you’ve been with one company and how likely you are to make a claim. If you’re inclined to remain with your current insurer, then call he company and make sure you’re getting all the available discounts or good behavior and loyalty.

Sullivan cautions against using price as the only factor when shopping for insurers and choosing a new one. “It’s not a good idea to buy based purely on price,” he said. “Anyone can have a great, low rate if they don’t answer the phones or pay out claims, so the cheapest might not necessarily be the best value.”

Courtesy of aolautos.com

This week’s increasingly detailed coverage of earthquake and tsunami destruction from the northeast region of Japan made it difficult to foresee auto production returning to normal on the schedule several major automakers presented. Today, speculation the region’s devastation is more pervasive than automakers admit may be confirmed as both Toyota Motor Corp. and Honda Motor Co. Ltd. extended production shutdowns.

Toyota’s statement this morning tersely said suspended vehicle production at all assembly plants in Japan, slated to resume today, is being extended to Saturday. The company-wide shutdown originally was scheduled to end March 17. And the company left open the likelihood for further extensions, saying, “A decision on when vehicle production will resume in Japan has yet to be made.”

Honda, which has a concentration of key facilities in the destruction zone, last week said vehicle production would cease until March 20, but now reportedly has extended the shutdown for another full week. Honda touched off a wave of speculation about the disaster’s likely longer-term effect on some automakers’ production when it last week informed U.S. dealers the company was temporarily blocking orders for Japan-sourced vehicles such as the Fit subcompact and several Acura models.

Nissan Motor Co. Ltd. said Monday that suppliers had requested assistance, parts supply remains a concern and “our plants, except for the Iwaki engine plant, will be partially operational.” A clue about the region’s apparently still-unstable situation came in Nissan’s statement, however: “As for the Iwaki engine plant, with aftershocks still heavily impacting the region and infrastructure reestablishment still continuing, restoration is expected to take longer than the other plants.”

Suppliers Silent
Japan’s close-knit and highly integrated supplier sector has not been forthcoming with particulars of how widely the disaster has impacted the country’s supplier network and, just as important, whether damage to roads and railways will take an extended toll on the just-in-time parts-delivery model the industry’s suppliers have made so famous.

Also still in question is the ability of needed raw materials to come into Japan and be moved about the affected region. The nation may for some time need to prioritize imports for humanitarian needs, leaving manufacturers of non-essential goods in a secondary role. And the supply lines themselves have been inescapably lengthened: several ports in the disaster region are extensively damaged and are out of commission – some perhaps for years.

Downstream Impact Increasing
With the bulk of the major Japanese automakers’ U.S. sales accounted for by vehicles assembly in North America, most have downplayed the disaster’s potential impact on North American vehicle supplies, but as assembly cutbacks continue and the ability of suppliers to maintain consistent deliveries remains in question, the once-widespread confidence of minimal effect in the U.S appears to be softening.

Toyota said today with a hint of what may be trouble to come, “so far the impact remains limited. All 13 North American vehicle and engine plants are running normally, although overtime has been curtailed to conserve parts that come from suppliers in Japan. Regarding dealerships in the U.S., inventories remain generally good.”

General Motors Co., a seemingly unlikely victim, last week suspended production of Chevrolet and GMC midsize pickups at a plant in Louisiana due to shortages of an undisclosed Japan-sourced component. This week, the shutdown rippled to the Tonawanda, NY, engine plant that builds engines for the pickups. Even Volvo Cars, owned by India’s Tata Motors, now is feeling the pressure. With several key suppliers in the disaster region, the New York Times reported, with a company executive saying Volvo was “preparing ourselves for a shortage” of components.

Courtesy of autoobserver.com

MONTEREY, Calif., March 14, 2011 /PRNewswire/ – Lexus, Honda and Toyota dealerships ranked highest in a newly released Pied Piper Prospect Satisfaction Index® (PSI®) Internet Lead Effectiveness(TM) Benchmarking Study to measure dealership responsiveness to customer inquiries over the internet. The study measured average dealership performance for all major U.S. automotive brands, showing a wide variety in performance by brand. Pied Piper conducted the study as an independent benchmarking service to its Internet Lead Effectiveness clients, who receive monthly internet “mystery shops” to measure and improve dealership response to internet inquiries.

Internet Lead Effectiveness rankings by brand are determined by the patent-pending Pied Piper PSI process, which ties “mystery shopping” measurement and scoring to actual industry sales success. Nineteen different Internet Lead Effectiveness questions generate composite scores for Timeliness of Response, Dealership and Salesperson Identification, Quality of Communication and Forwarding the Sale.

As recently as three years ago, only six in ten dealership internet inquiries were answered in any way within 24 hours. In comparison, today dealerships respond within 24 hours nine times out of ten, but often with an automated, impersonal response. However, despite the increase in responses driven by automated CRM systems, today a customer’s specific question is answered within 24 hours only 64% of the time. Or in other words, 36% of today’s internet inquiries remain unanswered after 24 hours.

“A dealer principal would never accept this sort of poor performance in traditional dealership activities,” said Fran O’Hagan, President and CEO of Pied Piper Management Company LLC. “Imagine ignoring 36% of sales customers who walk through the door, or ignoring 36% of customers who bring their car in for service.” A reason cited for this disparity in performance is that a dealership’s internet response performance is often invisible to dealership management, which is why Pied Piper offers internet mystery shopping to shine a light on dealership performance.

O’Hagan noted, “We find dramatically different industrywide results for Pied Piper internet mystery shops when compared to in-person mystery shops. When we break-out the auto industry average results into simple letter grades, we find that 64% of in-person mystery shops are either “A” or “B” performances, while only 16% earn a “D” or “F.” In comparison, only 17% of internet mystery shops earn an “A” or “B” grade, while 60% perform at a “D” or “F” level.”

The 2011 Pied Piper PSI Internet Lead Response Benchmarking Study (U.S. Auto Industry) was conducted between September 2010 and March 2011 by submitting internet inquiries to a sample of 2,816 dealerships nationwide representing all major brands. Examples of other recent Pied Piper PSI studies are the 2010 Pied Piper PSI U.S. Auto Industry Study and 2010 Pied Piper PSI U.S. Motorcycle Industry Study, both of which measured in-dealership, in-person sales effectiveness. Complete Pied Piper PSI industry study results are provided to vehicle manufacturers and national dealer groups. Manufacturers, national dealer groups and individual dealerships also order PSI evaluations as a tool to improve the sales effectiveness of their dealerships. For more information about the Pied Piper Prospect Satisfaction Index, and the patent-pending PSI process, go to www.piedpiperpsi.com.

About Pied Piper Management Company, LLC

Pied Piper Management Company, LLC is an eight year old Monterey, California company that develops and runs sales and marketing programs to maximize the performance of dealer networks. Go to www.piedpipermc.com.

Courtesy of prnewswire.com

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