Underwriting and Rating Tools Under Attack in State Legislatures

By Jeffrey Brewer | March 18, 2019

  • March 20, 2019 at 8:17 am
    Roland says:
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    What a great example of the insanity inflicted by government on business. I am sick and tired of wimps in the insurance industry kowtowing to useless government bureaucrats, grandstanding politicians, and an economically illiterate population. We should oppose, root and branch, any interference by politicians in the insurance industry, and attempt to inform the public that these interventions are actually bad for consumers. We should be able to sell what we want at prices that we determine, and consumers should be free to take it or leave it. Regulation by government always will be tainted by the nuttiness of politics, and no good will come of it.

    • March 20, 2019 at 8:24 am
      retired risk manager says:
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      Three cheers for Roland. !!!!!!!!!!!!!!!!

    • March 20, 2019 at 9:39 am
      Fair Playing Field says:
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      Good stuff, Roland. Gender was an optional rating factor in CA, though many carriers employ it. Faced with the prospect of the Department having to promulgate rating regulations to account for non-binary gender rating, the grandstanding political opportunist Dave Jones instead eliminated gender as a rating factor on the way out the door so that he can use that as an “accomplishment” in future runs for elected office.

      I do agree with the idea of a generally free, lightly regulated insurance market, but the continual rate increases taken by CA carriers in the file-and-use era prior to the passage of Proposition 103 and the stink a few years ago in several states regarding price optimization (raising rates based not so much on risk so much as the projected ability and tendency of a risk class to absorb and pay the higher rates), have proved that carriers do not always focus on pricing equity as much as how to make the most money in the face of the least resistance.

      Add to that the recent mortgage and banking debacles and the American financial industry is not winning any beauty contests when it comes to consumer protection. In the last two examples, there are a number of people walking around today that frankly should be in jail.

  • March 20, 2019 at 11:38 am
    Vox says:
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    The rub comes because the states make you buy auto liability coverage and some make you buy PIP. Consumers are not free to take it or leave it. For better or worse, insurance is seen as more than a business, it’s a public good. Roland, you are never, never going to change that. Insurance started out just the way you defined it, selling what we want at prices that we determine. For certain lines, it’s never going to be that way again, ever. I know it makes Ayn Rand roll in her grave but government has a role. The insurers’ ultimate weapon? We don’t have to write in every state. State regulation permits us to decide what states we write in. If it gets too bad, you stop writing new business in a state or you leave it.

    • March 20, 2019 at 3:15 pm
      SWFL Agent says:
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      A little off topic but we got off track when we began to look at insurance as a “public good”. I know many people would not agree, and certainly not legislators, but the way to control auto insurance cost is to remove state mandatory requirements. It’s counterintuitive and people scream about UM rates but rates will fall when we don’t make people buy it. Forcing people to buy it and “spreading the risk” hasn’t lowered cost. And certainly removing underwriting variables that work won’t lower it either. If you want it, need it, and find value in it, then buy it. If not, don’t.

    • March 21, 2019 at 9:06 am
      Roland says:
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      Yes, nowadays consumers typically are not free to take it or leave it. But that’s because of more interference by government, which is what we should oppose. SWFL Agent has it exactly right. Vote-grubbing politicians promise to end unfairness or lower costs or whatever. Then when their resulting intervention actually makes things worse for consumers instead of better, they claim they need another intervention to mitigate the ugly effects of their first intervention. And on and on.
      As for the diversity of state regulation, I expect it to all but disappear. Remember that to the creeps in D.C., anything that’s important must be regulated by them. If you disagree, it’s because you hate children, the elderly, and puppies – and of course you’re a racist. A greedy capitalist racist. What’s to stop them from taking over the whole ball of wax, and even forcing companies to write in every state? Certainly not the Constitution. They’ve ignored that my entire lifetime.
      I do not fantasize that I will ever see a free, voluntary insurance market. Politicians have people so bamboozled it’s pathetic. If even a quarter of the population understood basic economics, clowns like Bernie Sanders and Alexandria Ocasio-Cortez would be laughed off the stage in a minute.

  • March 20, 2019 at 2:32 pm
    Observor says:
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    For the most part, the restrictions do not impact insurance companies because they all play by the same rules, The biggest losers are the consumers. Legislatures are deciding that consumers with strong credit scores don’t deserve lower rates. Territorial restrictions favor powerful urban areas at the expense of rural areas. The new California gender restrictions ensure that parent with girls subsidize parents with sons.

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