The typical U.S. driver will pay less for auto insurance in 2007 than in 2006, with the average premium expenditure expected to drop by 0.5 percent, according to the Insurance Information Institute (I.I.I.).

But why should adjusters care if the average annual cost for auto insurance premiums nationwide has decreased for the first time since 1999? Because I.I.I. attributes the reductions to lower claim frequencies, which have declined by up to five percent in 2006 as compared to 2005. They also note very modest increases in claims severity. According to I.I.I., the average cost per claim, including the price of medical care and property damage, rose by as little as two percent in 2006.

In addition to fewer accidents, many industry analysts believe that fraud-fighting successes have contributed to a decrease in false bodily injury claims. Safer vehicles and roads, as well as graduated licensing programs for teens, are other factors driving the downward trend in auto insurance premium costs, I.I.I. said. The changing demographics of the U.S. population, with millions of baby boomers born between 1946 and 1964 now all in what insurers calculate to be their safest driving years, are suspected of contributing to these cost reductions, too.