Posted On: October 12, 2006, 1:15 am CDT

Posted By: Jacqueline

Ok. You helped me to understand SOME of your veiwpoint regarding having to pay overhead, MVRs and CLUEs for those that end up cancelling and those costs do add up quite a bit. But carriers pass those costs onto the independent agents too, so are they really out the money for the MVR's and CLue's for those drivers? I think not. If I am missing something please enlighten me.

The overhead for the carriers' employees -there you have a point. I don't know what you mean by transaction expenses and costs for setting up pay plans. When dealing with the lower income/low credit non-standard clientele, it has been my experience that many do not have checking accounts so they cannot choose a monthly EFT pay plan and must go on direct bill, which most of the companies charge a fee for that called an "installment fee" which gets tacked onto each premium bill. Again, isn't this one of the costs you cited which are passed on?

The "financially responsible" people are those who are fortunate to have not had anything bad happen to them such as job loss, divorce, corporate downsizing/job elimination, illness or disability. But one's good fortune can turn on a dime and it doesn't take long for one's credit to go to the cellar afterward. credit rating reflects on one's ability to pay their bills. There is a difference between being unable to pay the bills and being unwilling to. Is it right to sock it to someone with a clean driving record whom, through no fault of their own, finds themselves jobless in their middle-aged years (when obtaining another good job is nearly impossible due to age discrimination)in order to "reward" the more fortunate who have the means to pay their bills perfectly on time (thus being able to have good credit)? Is it fair for a poor divorcee to pay a crippling amount (which they cannot afford for very long) because the divorce ruined his or her credit?

Again, I must emphasize that one's income DOES play a major factor because the less income you have, the less ability you have to withstand an unforeseen emergency or a sharp increase in prices for your basic needs such as the drastic utility rate hike (like when National Fuel & Gas raised their rates by 41% in Sept 2005 here in northwstern PA, pricing out 68% of the Erie area residents).

Now, when you make say, only $14,000/yr or less, over %45 of your income goes to pay for shelter, a winter heating utility such as natural gas being raised in price by 41% is enough to put you beyond the economic pale. So now you are forced to choose whether you pay your rent and your electric and gas so you can cook, bathe and keep warm or paying your auto insurance premiums on time. Guess which one will win out. When there's a sharp rise in prices for the things you need to live or are required by law to have so you can just barely function and your income does not enable you to afford it, your bills suffer - hence so does your credit.

When the poor, who are the majority of those affected adversely by the practice of credit scoring, are charged more for something they are required by law to have in order to get to and from their low paying jobs, it should be no surprise that they let their policies lapse and cancel for non-payment because they simply can't afford what they are being charged. This should be of great concern here because we do not want to see more (as opposed to less) uninsured drivers out there on the roads with us or with our insureds where they would be facing increase in risk exposure to accidents incolving more and more uninsured drivers.

I agree with you that those who live responsibly should not be made to subsidithose who are less responsible. But I am very concerned about the impact this will have as more and more of the non-standard drivers let their policies cancel - which drives up costs for carriers and results in lost income to agents (like me) when more and more policies cancel for non-payment due to unaffordability for the customers. What I am getting at is that the situation that is possibly being created here will result in more uninsured drivers.