DATE: Saturday, October 18, 1997            TAG: 9710180330

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: STAFF AND WIRE REPORT 

DATELINE: DETROIT                           LENGTH:  123 lines

SOME DRIVERS GET INSURANCE SHOCK RATES ARE RISING FOR BIG VEHICLES THAT HAVE MORE COSTLY CLAIMS.

Alarmed by research showing that sport utility vehicles and pickup trucks are inflicting unusually costly harm to cars and their occupants in collisions, some big insurers are raising liability rates on the oversize vehicles in what could amount to the largest overhaul of liability coverage since the rise of no-fault laws a quarter-century ago.

To convince automakers that such vehicles must be modified to make them less dangerous, the insurers are also bankrolling new studies and planning an ambitious series of crash tests.

For motorists, the pocketbook effects of the overhaul of insurance rates could prove startling: a liability rate increase of up to 20 percent for drivers of sport utility vehicles and pickups over the next several years and a cut of up to 10 percent for car owners. That will likely mean an extra $50 to $700 a year in liability insurance payments for the first group, depending on current rates, and a savings of $25 to $350 for car owners.

Two of the nation's largest insurers, Farmers Insurance Group and Progressive Corp., have begun changing the way they calculate their rates. Executives at Allstate, Nationwide and Geico said they were reviewing the issue but were unlikely to make any decisions until they had more data, including broad studies by industry groups that will not be completed until next spring.

USAA, which specializes in providing auto, homeowner's and other lines of insurance to military officers and retired officers, said Friday it has no plans to change the premiums it charges on sport utility vehicles and large pickup trucks.

``We routinely monitor all the different vehicles and the effects they may have on claims we pay,'' said John Walmsley, a spokesman at USAA's San Antonio headquarters. So far, the insurer has seen no data that the claims it pays for utility vehicles and pickups were out of line, he said.

USAA, whose mid-Atlantic regional headquarters is in Norfolk, insured 382,421 private motor vehicles in Virginia at year-end 1996.

Actuaries for Farmers and Progressive said the reason for their rate moves was simple: Their customers who drive sport utility vehicles and pickups have been incurring unusually expensive claims to cover the damage and injuries they inflict during accidents. Rather than continuing to spread the extra cost among all drivers, including car owners, these insurers are starting to set rates accordingly.

``It's pretty obvious the size and weight of these vehicles and the way they're built is contributing to the loss experience,'' said Jonathan Adkisson, an actuary at Farmers, a unit of BAT Industries and the nation's third-largest insurer after State Farm and Allstate. ``When an accident occurs, the heavier vehicles are more likely to inflict damage and injuries, and these result in larger claims, so it seems appropriate to charge the drivers of those vehicles higher premiums.''

The biggest sport utility vehicles, like the Ford Expedition and the Chevrolet Suburban, weigh 5,200 to 6,000 pounds, while midsize sedans typically weigh 2,900 to 3,300 pounds. Sport utility vehicles also ride higher off the ground, so they tend to override the occupant-protection features of cars, and tend to have stiff frames that crumple other vehicles in collisions.

Liability coverage applies only to property damage and injuries caused to others by the policy-holder. Rates for collision coverage, which applies to repairs of a policy-holder's own vehicle, already take into account the fact that sport utility vehicles and pickups suffer less damage in crashes.

Separate rates to cover the policy-holder's injuries generally do not take into account the extra protection that these bigger vehicles provide to their occupants but are beginning to do so. But adjustments to this coverage offset only a small part of the extra liability cost.

If the full liability rate increase goes into effect, drivers of sport utility vehicles and pickups will be paying substantially larger total insurance bills.

Two groups in Washington, financed by most of the nation's insurers, are working on studies that will include six to 10 crash tests pitting sport utility vehicles against cars. The tests are partly intended to put pressure on federal regulators, who have repeatedly postponed such studies. Regulators have just begun planning six crash tests, which will begin this winter.

Two crash tests already conducted in Europe by independent researchers found that sport utility vehicles, because of their height and weight, caused substantial damage to cars' passenger compartments. The insurers want automakers to design vehicles that are more compatible in crashes, said Brian O'Neill, president of the Insurance Institute for Highway Safety and the Highway Loss Data Institute, the Washington groups conducting the studies. ``We need the manufacturers to say, `Wait a minute - what happens when the Ford Expedition hits the Ford Escort?' '' he said.

The controversy over the safety of air bags had distracted insurers until recently from the more important safety issue of sport utility vehicles, he added.

Auto industry executives say they are constantly conducting research into ways to reduce the damage their products inflict. Indeed, Ford has long been Detroit's leader on many safety issues. But they also contend that some incompatibility is inevitable because Americans want a range of vehicle sizes. Helen Petrauskas, Ford's vice president for environmental and safety engineering, said that higher rates of seat belt use and reductions in drunken driving could yield greater safety gains than design changes in sport utility vehicles.

While the number of very large sport utility vehicles is rising quickly, the likelihood that any single big sport utility vehicle will kill a car occupant is falling, new research by Ford indicates. It attributes the improvement partly to greater use of seat belts and air bags, partly to better-designed cars, and partly to a shift in who drives sport utility vehicles. Suburban families are increasingly replacing single men as owners.

But what is particularly interesting about the Farmers and Progressive research is that, unlike that of Ford, the insurers were able to take into account differences in driver age, sex, location and previous driving record. And what the insurers have found is that the same driver will inflict considerably greater damage and injuries when driving a sport utility of almost any size than when driving a car.

The industry research groups led by O'Neill are conducting further studies. The safety institute intends to release a statistical study this fall of the death toll inflicted by sport utility vehicles and pickups. In a separate study next spring, the institute plans up to 10 crash tests.

The data institute is drafting a third study, scheduled for release in April, that will look at insurers' costs to repair vehicles hit by sport utility vehicles and pickups.

MEMO: This story was compiled from reports by The New York Times and

staff writer Tom Shean. ILLUSTRATION: [Photos of cars] KEYWORDS: SPORTS UTILITY VEHICLE ACCIDENT INSURANCE

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