There is a solution to assit these demographics. Instead of a continuation of throwing rate at these customers, what about an index that will assist in “applied behavior” for improved results and cost reductions?
Our current practice of pricing is like timing a runner in the 100 yard dash by their vertical leap as there is a correlation to how high a person can jump to his running speed. We continue to utilize coorelations to other factors when we have technology today to measure actual performance of an insured while producing a C.L.A.I.M. Index® that will improve driver performance for premium reductions.
It has already been done in the credit industry with the advent of the “credit score” where credit customers improved their behavior by 36%.
Go to http://www.evalscore.com and read the “white paper” by Dr. Michael Kalish, Cognitive Science Department,University of Louisiana
The survey and it’s authors clearly know very little about auto insurance, specifically the calculation of rates. The fact that they suggest “prohibiting ‘unfair pricing’ for auto based on prior coverage and credit history” clearly demonstrates their lack of knowledge. Past experience is one of the greatest indicators or future experience and credit history allows insurers to get an idea of payment patterns (is the insured not going to pay the premiums but expect coverage) and whether the insured keeps their vehicle in running condition.
The group’s request to reduce the minimum limits for LMI families is even more outrageous. Many of the MiFi limits out there are antiquated and do not provide sufficient coverage in the event of a loss. So to further reduce these limits creates a burden for other drivers on the road because it will require the other drivers to carry higher Underinsured Motorist limits thereby increasing their premiums.
Driving a car is a right, not a privilege. If you cannot afford it then take the bus/train/subway. That’s what I do.
I agree with most of your post, but feel I need to speak up on this oft-repeated “driving is a privelege, not a right” mantra (which is what I assume you meant). The consumer group makes a fair point about the impact of insurance affordability on low-income groups. As someone who grew up poor in a rural area, I can say your solution of “take the bus/train/subway” simply does not apply to many low income people. For such people no car = no job. It’s as simple as that.
Relative to urban, sure. So are housing prices. So are wages. It doesn’t say anything about affordability.
Of course, I don’t support more rate regulation, and suggesting that we improve affordability by lowering minimum liability limits might just be the most stupid thing I’ve heard in a long time. But telling someone in a rural area who can’t afford their car insurance to “just take the bus” is trying to match stupidity with stupidity.
The fact I guess of the industry reacting as strongly as their immediate replies suggest suggests there is something more going on with the study. Perhaps all should look at their conclusions a little stronger.
My impression is that this is really an attack on the use of credit scoring and if so I say go for it. What you see is really not what you get in my opinion; one quote but when the actual policy comes in the exceptions and exclusions are numerous and explained by what the underwriting function did. Similar to the auto financing industry…bait and switch.
For instance, a friend of mine just purchased a new Chevrolet pickup. In that process for this $30,000.00 plus vehicle the dealership offered to check into financing for their customer. Although he financially DID NOT need this arrangement, paying cash for the pickup, he agreed to allow them to present figures, etc. What came out of this was a letter to him saying that he did not qualify for their financing program on the basis THAT HE HAD NO CREDIT HISTORY. That is because ALL his bills were paid on time that he had no credit. Strange that a TOO GOOD Credit History precludes you from a credit based finance program. The fact that he paid bills should, I thought, reflect a good profile.However it was not to be for that credit-financing; so he concluded the purchase with a cash payment. Strange isn’t it?. Say, you never had a house fire or loss, had no mortgage but then told your agent that you were thinking of presenting a claim for an incident and guess what, a no coverage letter is received and a rate increased followed. Outside of changing insurance companies would you not think industry practices are strange and geared only for one purpose- profit.
There is absolutely no doubt left in this country that the middle-class and lower socio-economic classes have been decimated in the current economic crisis. What money you have goes for less.
Discriminatory pricing is certainly real. The perspective of who is discriminated against, either by individuality or class is something the industry may want to or should take a further look at.
And yes, you could say I understand UNDERWRITING .
There is no reading between the lines in credit history. If you have crappy credit, your rate should be increased. Period end. Pay your bills on time, better credit, lower costs. It is not going to be a quick fix, it will take years, but the person got themselves in the mess, therefore, get themselves out. It’s no one’s fault, but the individual.
I am assuming that the dealership your friend went to, only used 1 of the 3 main credit bureaus, if they even used a “legit” one? If he had paid all of his bills on time, then the dealership would have done a dance and asked him to sign right up. The dealership doesn’t send the letter out, the credit bureau does.
The problem with auto insurance, or any insurance or credit system is that the majority of people don’t understand it. I can understand why people felt so hopeless back in the day, having no education or any ability to get out of the neighborhood, but guess what? It’s 2012, and there is this thing called the internet. If people spent half the time educating themselves as they do watching YouTube videos or whatever, the world would be a better AND SMARTER place!
For the CFA to ask for government subsidies for auto insurance is UNBELIEAVABLE!! What about all the hard working people who don’t have a ton of money, who are not assisted by the government, who would be EMBARRASSED to be assisted by the government, who can barely make ends meet? We all want lower prices too, but claiming “disparate treatment” is ridiculous.
Take responsibility for yourself! Educate yourself!
Insurance programs, just like every other product/service designed for the masses, CAN NOT be designed for the “exceptions”. In the case of your friend, clearly that is not a normal scenario that insurance (or finance companies for that matter) deal with on a day to day basis. We are all fully aware of how “credit” is built and maintained. It is not just simply by making your payments for “bills” on time (which I am assuming are probably utilities, medical payments etc. since you said he has no debt). The way you build, maintain credit is by borrowing money, in any form or fashion and then paying it back on time. Period.
The point of this is that even though you might not like it, you HAVE to play the game. Even if you can pay for everything in cash, it certainly does not hurt to have a credit card of some sort in order to build your credit. I am certainly NOT suggestion piling up a ton of debt, what I am suggesting is choosing something you pay for every month and “charging” it until the end of the month instead of paying cash. Building credit is just that easy!
No, it doesn’t seem right that someone in his situation was faced with a scenario like that, but like I said, he is certainly the exception, not the rule. Insurance companies CAN NOT be designed and managed around the exceptions. Even if you don’t need financing for something right now, it never hurts to be prepared.
I do exactly as you say. I charge everything and pay it off at the end of every month and pay no interest. The credit card companies keep raising my limit trying to tempt me to spend more. Ain’t gonna happen. My credit rating is about 800.According to the credit card companies some one who pays off their balance every month is known as a “dead beat”. go figure.
I do not believe that the industry unfairly targets the poor but the end result of the current circumstancs are as if they did. Increases in gasoline prices effect the poor disproportionately. To the extent that auto insurance premiums are inflated for all drivers, the poor are likewise disproportionately impacted. There are many variations of this phenomimnum and all have a common denominator and that is that the poor have less disposable income. Automobile insurance premiums are inflated accross the board because companies find it easier to raise premiums than to fight fraud, especially medical, and it has reached epidemic levels. It is our regulators who are too quick to support premium increases and too slow to enforce statutory requirements that insurance companies resist detectable fraud.
The CFA needs to get their head out of the sand: NJ has a Dollar A Day insurance AND you can’t connect rating factors A to C without going through B; Of course Zip Codes affect the rate!
I agree 100%. You have to qualify by obtaining a license and passing a driving test. Illegal Aliens need not apply. I don’t agree with many of the companies underwriting guides on Auto Insurance and think credit score is overrated for determining rate. Some of these companies have so many factors going into the process an agent is at a loss to figure out where the premium came from, but most are tied into the score.
When I was a student I was once hit by the son of an insurance agent. He paid for my damages out of pocket instead of filing a claim because he didn’t want his insurance rates to go up, so even though he wasn’t exactly a great driver, there was no cost to the insurance company. If he had been poor, I wonder if he would have filed a claim instead of paying me out of pocket? Does this scenario mean that income could be a legitimate risk factor for consideration in auto premium?
I don’t know about other states, but Texas sets it by statute and recently increased the minimum limits for liability. It is still far too low to pay for any serious BI claim and most PD claims since new car and truck values are higher than the limits. We still have to go to UM/UIM limits when it proves inadequate.
First of all, Stephen Brobeck’s appointment as Executive Director of CFA is unconstitutional. His so called study is nothing more than another illegitimate, unsubstantiated means to stir up the left wing campaign initiative of class warfare.
Huh? CFA is a non-profit and its executive director is selected by CFA’s board. You might be thinking of Richard Cordray whom indeed received a recess appointment from President Obama. Cordray was the guy who, as a 1/2 term Ohio State Attorney General, negotiated a bid rigging settlement with AIG over the AIG/Marsh/Chubb/Hartford FSG antitrust suit.
The issue of the recess appointment will be an interesting one once litigated. I am curious what a court will say about the validity of a Congressional session in which a single member enters, raps a gavel in the empty chamber and then walks out. The GOP admits they may have concern with Richard Cordray but are blocking a vote on the appointment because they disagree with the office itself. One might argue that the proper approach is to pass legislation eliminating the office rather than to willfully ignore current law because it is disliked.
This is just another piece of proof Hunter is little more than an anti insurance hack. I’ve got an idea, let’s lower min fin respons to cut the costs…ok, now you only need to have $1000…what just happened? The cost of collision went up. The cost of UM/UIM went up.
In this CFA world of pretty things, all we need is someone to decide what percentage of income we should pay for products and services. If someone who make $20000 a year buys $1000 worth of gasoline in a year, they are paying 5% of their income to gasoline…while that well off guy, who has the nice BMW, drives 3 times as much and spends $3000 for gasoline…he makes $120000…why, that’s not fair, he pays more for gas, but a smaller percentage than the poorer man…the well off guy only pays 2.5%…THAT’S NOT FAIR!!!!!!!
What some of these folks are pushing this country to is a reality where all gifts are punished to make it ‘fair’…if you’re a gifted runner, that’s not fair, so you should carry around an extra 20 pound weight…
WHO IN THEIR RIGHT MIGHT WOULD SUGGEST LOWERING FINANCIAL RESPONSIBILTY LIMITS???? People who think it isn’t fair, that’s who…heck, in FLA, you don’t even have to carry bodily injury liability…in other states, $5000 is enough for property damage liability…but lets make these lower…it’s not fair.
Driving is a privilege, you must do certain things to obtain the driving privilege, such as pass a driving test, have a vehicle to drive, and yes, in most places, pay for insurance.
I agree that the free market should decide pricing regardless of income and that lowering financial responsibility limits is a bad idea. But the fact that insurance companies are allowing medical fraud to run rampant has been documented by the Insurance Research Council.
it’s not as easy to stop as it sounds; I agree it is a problem, but please understand the field is tilted against most carriers (I’m talking auto carriers here, not health); in some venues we must submit to arbitration, which in most cases is decided by a plaintiff attorney who acts as the arbitrator…believe me, I don’t like paying more than I owe. This is a really deep subject, are we talking about PIP/Medpay first party benefits, or 3rd party bodily injury claims?
No facts. No corroboration. Keeping in mind that Strphen Brobeck’s appointment as CFA Executive Director was unconstitional. His so called study is nothing more than another illegitimate, unsubstantiated means to furhter the left wing campaign initiative to create and incite class warfare.
These “poor” urban drivers with the 20″ rims and stereos are the drug dealers and pimps running around in their Escalades. They don’t know what insurance is unless they are forced to get it for a month to get the car inspected or registered. Something needs to be done about the month to month policies that lapse and the driver goes 11 months without coverage. If they can afford the vehicle, they can afford the coverage.
I take extreme offense at “Agent” comment. I happen to be one of those “poor urban drivers” you appear to think are drug dealers and pimps. I am living on social security disability, I live in an urban area and I have poor credit. However, the last ticket I received was in 1984 and my last accident was in 1980. Yet my insurance rate is nearly 3 times that of my 30 year old daughter who has had 3 heavy damage accidents in the last 3 years. However, my daughter is in her last year of law school, she is married to a VP of a national bank and her credit score is high. When I questioned my rate, I was told that insurance company studies have shown that poor people with poor credit are more likely to file false claims than the other folks. I am 56 years old and have NEVER filed ANY insurance claim in my life. NEVER. As such I should be getting a low premium….but I’m not and some companies such as Allstate won’t even take me. Not because of my driving record but because of my credit score!! Insurance companies disgust me.
Good God isn’t Robert Hunter, RETIRED yet his ideas have always been a disaster for the insurance buying public and Santa Monica watchdogs as well. Why don’t they give something really beneficial like a true No Fault insurance in every state if they really want to accomplish something. This would eliminate uninsured motorist coverage and underinsured motorist coverage, and make each driver responsible for their own driving habits. That would save everyone premium.
In theory it could save costs, but I do not believe insurance customers in Michigan are getting much of a break, and they have the truest form of no fault we have available in this country.
If programs such as California’s Low Cost Auto Program were more than a solution in search of a problem, they would be used. Some people ignore financial responsibility, irrespective of the limits and the cost. Sometimes I think Robert Hunter is Don Quixote in a geek disguise. I wish he would aim more of his intelligence in the direction and support of those who already obey the law.
Once again, as a 30 year veteran of the insurance business, we feel that we can achieve like kind results in the targeted demographics of this article with less controversy by using a internal “credit” predictor by a patent pending IPI® (Insurance Payment Index). These insured’s have a payment pattern that is either good or bad. They do not pay their insurance premiums any better or worse than any outstanding obligations, however, currently, the historical premium payment data is available, valuable, but not shared.
With respect to historical performance, a C.L.A.I.M. Index® would give an insured the opportunity to have an “objective” benchmark which is reflective of his prior premium vs losses and a tool for improvement as insured’s will protect their score through “applied behavior” reducing loss ratios improving affordability while enhancing company profitability.
As an agent, I am constantly asking myself why companies charge the people with the least ability to pay the most! I understand the credit rating issue with insured with higher credit ratings file less claims, but an agent that can offer a financially challenged homeowner an affordable rate while explaining how to keep that rate will not only be more likely to retain that customer, but also be able to help manage that client’s potential claim filings. In the long run, it would also save companies that overcharge substantial monies by not having to sent constant late notices, reinstatements, etc. to those struggling to pay the high premiums.
As a licenced producer/CSR, I am always talking to people to make them aware what the liability actually covers. It is the lease expensive part of the policy, with the most protection for you. My husband and I struggle and live pay check to pay check, would be considered low income but I for one would never lower my limits. In the world we live in it’s a reality that people like to sue. If those limits are low you may be sued personally. I had a co worker, that did a rolling stop into the vehicle in front of him. No damage to either vechile. He was sued, she asked for $200,000 and settled out of court for $50,000, if he had had the state min limits of 20/40 he would have been on the hook for $30,000 himself. I am a firm beliver of having good liability. If I write something with the state min, I make that person sign an acknowledgement that says I explained to them the reasoning for higher limits.
There is a solution to assit these demographics. Instead of a continuation of throwing rate at these customers, what about an index that will assist in “applied behavior” for improved results and cost reductions?
Our current practice of pricing is like timing a runner in the 100 yard dash by their vertical leap as there is a correlation to how high a person can jump to his running speed. We continue to utilize coorelations to other factors when we have technology today to measure actual performance of an insured while producing a C.L.A.I.M. Index® that will improve driver performance for premium reductions.
It has already been done in the credit industry with the advent of the “credit score” where credit customers improved their behavior by 36%.
Go to http://www.evalscore.com and read the “white paper” by Dr. Michael Kalish, Cognitive Science Department,University of Louisiana
The survey and it’s authors clearly know very little about auto insurance, specifically the calculation of rates. The fact that they suggest “prohibiting ‘unfair pricing’ for auto based on prior coverage and credit history” clearly demonstrates their lack of knowledge. Past experience is one of the greatest indicators or future experience and credit history allows insurers to get an idea of payment patterns (is the insured not going to pay the premiums but expect coverage) and whether the insured keeps their vehicle in running condition.
The group’s request to reduce the minimum limits for LMI families is even more outrageous. Many of the MiFi limits out there are antiquated and do not provide sufficient coverage in the event of a loss. So to further reduce these limits creates a burden for other drivers on the road because it will require the other drivers to carry higher Underinsured Motorist limits thereby increasing their premiums.
Driving a car is a right, not a privilege. If you cannot afford it then take the bus/train/subway. That’s what I do.
I agree with most of your post, but feel I need to speak up on this oft-repeated “driving is a privelege, not a right” mantra (which is what I assume you meant). The consumer group makes a fair point about the impact of insurance affordability on low-income groups. As someone who grew up poor in a rural area, I can say your solution of “take the bus/train/subway” simply does not apply to many low income people. For such people no car = no job. It’s as simple as that.
But wouldn’t rates be less in a rural area to begin with??
Relative to urban, sure. So are housing prices. So are wages. It doesn’t say anything about affordability.
Of course, I don’t support more rate regulation, and suggesting that we improve affordability by lowering minimum liability limits might just be the most stupid thing I’ve heard in a long time. But telling someone in a rural area who can’t afford their car insurance to “just take the bus” is trying to match stupidity with stupidity.
Don’t forget that there is always a bicycle!
They could pretend to be Amish and get a horse and buggy!
Where in the constituion state that we have a right to transportation methods?
Did you mean that driving a car is a priviledge?
The fact I guess of the industry reacting as strongly as their immediate replies suggest suggests there is something more going on with the study. Perhaps all should look at their conclusions a little stronger.
My impression is that this is really an attack on the use of credit scoring and if so I say go for it. What you see is really not what you get in my opinion; one quote but when the actual policy comes in the exceptions and exclusions are numerous and explained by what the underwriting function did. Similar to the auto financing industry…bait and switch.
For instance, a friend of mine just purchased a new Chevrolet pickup. In that process for this $30,000.00 plus vehicle the dealership offered to check into financing for their customer. Although he financially DID NOT need this arrangement, paying cash for the pickup, he agreed to allow them to present figures, etc. What came out of this was a letter to him saying that he did not qualify for their financing program on the basis THAT HE HAD NO CREDIT HISTORY. That is because ALL his bills were paid on time that he had no credit. Strange that a TOO GOOD Credit History precludes you from a credit based finance program. The fact that he paid bills should, I thought, reflect a good profile.However it was not to be for that credit-financing; so he concluded the purchase with a cash payment. Strange isn’t it?. Say, you never had a house fire or loss, had no mortgage but then told your agent that you were thinking of presenting a claim for an incident and guess what, a no coverage letter is received and a rate increased followed. Outside of changing insurance companies would you not think industry practices are strange and geared only for one purpose- profit.
There is absolutely no doubt left in this country that the middle-class and lower socio-economic classes have been decimated in the current economic crisis. What money you have goes for less.
Discriminatory pricing is certainly real. The perspective of who is discriminated against, either by individuality or class is something the industry may want to or should take a further look at.
And yes, you could say I understand UNDERWRITING .
Just my opinion.
There is no reading between the lines in credit history. If you have crappy credit, your rate should be increased. Period end. Pay your bills on time, better credit, lower costs. It is not going to be a quick fix, it will take years, but the person got themselves in the mess, therefore, get themselves out. It’s no one’s fault, but the individual.
I am assuming that the dealership your friend went to, only used 1 of the 3 main credit bureaus, if they even used a “legit” one? If he had paid all of his bills on time, then the dealership would have done a dance and asked him to sign right up. The dealership doesn’t send the letter out, the credit bureau does.
The problem with auto insurance, or any insurance or credit system is that the majority of people don’t understand it. I can understand why people felt so hopeless back in the day, having no education or any ability to get out of the neighborhood, but guess what? It’s 2012, and there is this thing called the internet. If people spent half the time educating themselves as they do watching YouTube videos or whatever, the world would be a better AND SMARTER place!
For the CFA to ask for government subsidies for auto insurance is UNBELIEAVABLE!! What about all the hard working people who don’t have a ton of money, who are not assisted by the government, who would be EMBARRASSED to be assisted by the government, who can barely make ends meet? We all want lower prices too, but claiming “disparate treatment” is ridiculous.
Take responsibility for yourself! Educate yourself!
And druggies deal with cash only too! In a perfect world we would be able to sort that out, but unfortunately, that is not the case.
Insurance programs, just like every other product/service designed for the masses, CAN NOT be designed for the “exceptions”. In the case of your friend, clearly that is not a normal scenario that insurance (or finance companies for that matter) deal with on a day to day basis. We are all fully aware of how “credit” is built and maintained. It is not just simply by making your payments for “bills” on time (which I am assuming are probably utilities, medical payments etc. since you said he has no debt). The way you build, maintain credit is by borrowing money, in any form or fashion and then paying it back on time. Period.
The point of this is that even though you might not like it, you HAVE to play the game. Even if you can pay for everything in cash, it certainly does not hurt to have a credit card of some sort in order to build your credit. I am certainly NOT suggestion piling up a ton of debt, what I am suggesting is choosing something you pay for every month and “charging” it until the end of the month instead of paying cash. Building credit is just that easy!
No, it doesn’t seem right that someone in his situation was faced with a scenario like that, but like I said, he is certainly the exception, not the rule. Insurance companies CAN NOT be designed and managed around the exceptions. Even if you don’t need financing for something right now, it never hurts to be prepared.
I do exactly as you say. I charge everything and pay it off at the end of every month and pay no interest. The credit card companies keep raising my limit trying to tempt me to spend more. Ain’t gonna happen. My credit rating is about 800.According to the credit card companies some one who pays off their balance every month is known as a “dead beat”. go figure.
I do not believe that the industry unfairly targets the poor but the end result of the current circumstancs are as if they did. Increases in gasoline prices effect the poor disproportionately. To the extent that auto insurance premiums are inflated for all drivers, the poor are likewise disproportionately impacted. There are many variations of this phenomimnum and all have a common denominator and that is that the poor have less disposable income. Automobile insurance premiums are inflated accross the board because companies find it easier to raise premiums than to fight fraud, especially medical, and it has reached epidemic levels. It is our regulators who are too quick to support premium increases and too slow to enforce statutory requirements that insurance companies resist detectable fraud.
The CFA needs to get their head out of the sand: NJ has a Dollar A Day insurance AND you can’t connect rating factors A to C without going through B; Of course Zip Codes affect the rate!
Driving is a Privilege NOT A RIGHT.
I agree 100%. You have to qualify by obtaining a license and passing a driving test. Illegal Aliens need not apply. I don’t agree with many of the companies underwriting guides on Auto Insurance and think credit score is overrated for determining rate. Some of these companies have so many factors going into the process an agent is at a loss to figure out where the premium came from, but most are tied into the score.
When I was a student I was once hit by the son of an insurance agent. He paid for my damages out of pocket instead of filing a claim because he didn’t want his insurance rates to go up, so even though he wasn’t exactly a great driver, there was no cost to the insurance company. If he had been poor, I wonder if he would have filed a claim instead of paying me out of pocket? Does this scenario mean that income could be a legitimate risk factor for consideration in auto premium?
I thought it odd that they want the Ins Commissioners to reduce the minimum financial responsibility limits. Aren’t those usually set by statute?
I don’t know about other states, but Texas sets it by statute and recently increased the minimum limits for liability. It is still far too low to pay for any serious BI claim and most PD claims since new car and truck values are higher than the limits. We still have to go to UM/UIM limits when it proves inadequate.
First of all, Stephen Brobeck’s appointment as Executive Director of CFA is unconstitutional. His so called study is nothing more than another illegitimate, unsubstantiated means to stir up the left wing campaign initiative of class warfare.
Huh? CFA is a non-profit and its executive director is selected by CFA’s board. You might be thinking of Richard Cordray whom indeed received a recess appointment from President Obama. Cordray was the guy who, as a 1/2 term Ohio State Attorney General, negotiated a bid rigging settlement with AIG over the AIG/Marsh/Chubb/Hartford FSG antitrust suit.
The issue of the recess appointment will be an interesting one once litigated. I am curious what a court will say about the validity of a Congressional session in which a single member enters, raps a gavel in the empty chamber and then walks out. The GOP admits they may have concern with Richard Cordray but are blocking a vote on the appointment because they disagree with the office itself. One might argue that the proper approach is to pass legislation eliminating the office rather than to willfully ignore current law because it is disliked.
This is just another piece of proof Hunter is little more than an anti insurance hack. I’ve got an idea, let’s lower min fin respons to cut the costs…ok, now you only need to have $1000…what just happened? The cost of collision went up. The cost of UM/UIM went up.
In this CFA world of pretty things, all we need is someone to decide what percentage of income we should pay for products and services. If someone who make $20000 a year buys $1000 worth of gasoline in a year, they are paying 5% of their income to gasoline…while that well off guy, who has the nice BMW, drives 3 times as much and spends $3000 for gasoline…he makes $120000…why, that’s not fair, he pays more for gas, but a smaller percentage than the poorer man…the well off guy only pays 2.5%…THAT’S NOT FAIR!!!!!!!
What some of these folks are pushing this country to is a reality where all gifts are punished to make it ‘fair’…if you’re a gifted runner, that’s not fair, so you should carry around an extra 20 pound weight…
WHO IN THEIR RIGHT MIGHT WOULD SUGGEST LOWERING FINANCIAL RESPONSIBILTY LIMITS???? People who think it isn’t fair, that’s who…heck, in FLA, you don’t even have to carry bodily injury liability…in other states, $5000 is enough for property damage liability…but lets make these lower…it’s not fair.
Driving is a privilege, you must do certain things to obtain the driving privilege, such as pass a driving test, have a vehicle to drive, and yes, in most places, pay for insurance.
Chad,
I agree that the free market should decide pricing regardless of income and that lowering financial responsibility limits is a bad idea. But the fact that insurance companies are allowing medical fraud to run rampant has been documented by the Insurance Research Council.
it’s not as easy to stop as it sounds; I agree it is a problem, but please understand the field is tilted against most carriers (I’m talking auto carriers here, not health); in some venues we must submit to arbitration, which in most cases is decided by a plaintiff attorney who acts as the arbitrator…believe me, I don’t like paying more than I owe. This is a really deep subject, are we talking about PIP/Medpay first party benefits, or 3rd party bodily injury claims?
Chad,
I’m referencing both.
Here is a link to an article I wrote recently that got two thumbs up from a number of prominent SIU leaders.
http://www.insurancethoughtleadership.com/index.php/site/claims-management/giving-the-nod-to-soft-fraud-divided-we-fall/
No facts. No corroboration. Keeping in mind that Strphen Brobeck’s appointment as CFA Executive Director was unconstitional. His so called study is nothing more than another illegitimate, unsubstantiated means to furhter the left wing campaign initiative to create and incite class warfare.
And you see all these “poor” urban drivers with their $1500 stereo systems and $3000 20 inch rims. Cry me a river.
These “poor” urban drivers with the 20″ rims and stereos are the drug dealers and pimps running around in their Escalades. They don’t know what insurance is unless they are forced to get it for a month to get the car inspected or registered. Something needs to be done about the month to month policies that lapse and the driver goes 11 months without coverage. If they can afford the vehicle, they can afford the coverage.
I take extreme offense at “Agent” comment. I happen to be one of those “poor urban drivers” you appear to think are drug dealers and pimps. I am living on social security disability, I live in an urban area and I have poor credit. However, the last ticket I received was in 1984 and my last accident was in 1980. Yet my insurance rate is nearly 3 times that of my 30 year old daughter who has had 3 heavy damage accidents in the last 3 years. However, my daughter is in her last year of law school, she is married to a VP of a national bank and her credit score is high. When I questioned my rate, I was told that insurance company studies have shown that poor people with poor credit are more likely to file false claims than the other folks. I am 56 years old and have NEVER filed ANY insurance claim in my life. NEVER. As such I should be getting a low premium….but I’m not and some companies such as Allstate won’t even take me. Not because of my driving record but because of my credit score!! Insurance companies disgust me.
Good God isn’t Robert Hunter, RETIRED yet his ideas have always been a disaster for the insurance buying public and Santa Monica watchdogs as well. Why don’t they give something really beneficial like a true No Fault insurance in every state if they really want to accomplish something. This would eliminate uninsured motorist coverage and underinsured motorist coverage, and make each driver responsible for their own driving habits. That would save everyone premium.
In theory it could save costs, but I do not believe insurance customers in Michigan are getting much of a break, and they have the truest form of no fault we have available in this country.
If programs such as California’s Low Cost Auto Program were more than a solution in search of a problem, they would be used. Some people ignore financial responsibility, irrespective of the limits and the cost. Sometimes I think Robert Hunter is Don Quixote in a geek disguise. I wish he would aim more of his intelligence in the direction and support of those who already obey the law.
Once again, as a 30 year veteran of the insurance business, we feel that we can achieve like kind results in the targeted demographics of this article with less controversy by using a internal “credit” predictor by a patent pending IPI® (Insurance Payment Index). These insured’s have a payment pattern that is either good or bad. They do not pay their insurance premiums any better or worse than any outstanding obligations, however, currently, the historical premium payment data is available, valuable, but not shared.
With respect to historical performance, a C.L.A.I.M. Index® would give an insured the opportunity to have an “objective” benchmark which is reflective of his prior premium vs losses and a tool for improvement as insured’s will protect their score through “applied behavior” reducing loss ratios improving affordability while enhancing company profitability.
This post gives me too much fodder for my blog. I’ll save my editorial for http://www.txinsurancepro.com.
Let’s just say, the authors of the study are a little misguided.
As an agent, I am constantly asking myself why companies charge the people with the least ability to pay the most! I understand the credit rating issue with insured with higher credit ratings file less claims, but an agent that can offer a financially challenged homeowner an affordable rate while explaining how to keep that rate will not only be more likely to retain that customer, but also be able to help manage that client’s potential claim filings. In the long run, it would also save companies that overcharge substantial monies by not having to sent constant late notices, reinstatements, etc. to those struggling to pay the high premiums.
As a licenced producer/CSR, I am always talking to people to make them aware what the liability actually covers. It is the lease expensive part of the policy, with the most protection for you. My husband and I struggle and live pay check to pay check, would be considered low income but I for one would never lower my limits. In the world we live in it’s a reality that people like to sue. If those limits are low you may be sued personally. I had a co worker, that did a rolling stop into the vehicle in front of him. No damage to either vechile. He was sued, she asked for $200,000 and settled out of court for $50,000, if he had had the state min limits of 20/40 he would have been on the hook for $30,000 himself. I am a firm beliver of having good liability. If I write something with the state min, I make that person sign an acknowledgement that says I explained to them the reasoning for higher limits.
i cant believe so many negative people are saying these things,like who fought the law and the law won, insurance companies…lol