It’s about time. This should have benn done 20 years ago. Talk about things moving slowly. HOWEVER, there is more that needs to be done.
Auto insurers MUST move to system based on TRUE exposure. Exposures related to territory seems to be moving in that direction. Now we need to establish a mileage threshold (say 12,000 miles anniually) for rating purposes. A credit for driving under the threshold as well as a surcharge for going over. This is a system tryuly based on exposure. After all, isn’t risk based against exposure and exposure equal to rate/premium charged. Insurance wasn’t designed to socialized it was designed to be calculed off tru exposure.
Let them install Trip Sensor data recording devices on every vehicle, solely for the purpose of recording miles driven. As long as its regulated, why not. Let them use all other data strictly for research purposes.
There are several technologies that can be utilized. In fact, voluntary reporting could be an option. People will cheat, you say. Well, we know that fooling with an odemeter reading is serious business. An audit performed when the car is sold (odometer reading is necessary at that time) would be one solution. And, make mis-statements carry the same penalty as “other” insurance fraud.
Also, instead of territories, why not use zip codes as they would relate directly to census data. Population density equals increased risk equals higher prem,iums.
It is not correct to state that the territorial rate caps were put in place because urban rates were soaring. Only one community – Newark – received a significant benefit ( about 26% reduction) when the capes went into effect. Now, about 12 or so urban areas have rates that are artificially capped – at the expense of suburban and rural territories.
Has anyone in the industry ever noticed that the industry itself cannot correct simple problems. TO PROVE MY POINT LOOK AT INSURANCE CAPTIVES. THEY PRODUCE POSITIVE RESULTS AND UNDERWRITING PROFITS IN THE SAME AREAS THE INSURANCE INDUSTRY CANNOT! Luck, I doubt it.
I believe the insurance industry (like government) doesn’t want to fix problems because it may mean lower revenues (although there will be increased profits) and reduced staffing. Just take a look at the Department of Insurance. Has anyone ever tried to fix a simple problem or have them address a “new direction”. IMPOSSIBLE!
Lets face it. Insurance is a great concept. What we need is less oversight in the developmental stages. Stifle creativity and you stifle the future.
Lets do away the bureacracy. And lets start fixing problems.
I have been trying for well over 20 years (through numerous presentations to the NJ Dept of Insurance, insurnce companies, etc.) to change the methodology of auto insurance rating from territory/age, etc. to a mileage based system. Now, it seems that Progressive introuded this concept this past week in Iowa on a trial basis.
Not only would this be a much more practical approach, but with technology we now have, we can track (in real time through a web browser – with statistical storage) not only mileage but also speed of the vehicle, etc.
My plan calls for a combination of rating factors including home zip code and actual miles driven. My model provides for 12,000 miles per year with credits applied for less then 12K and surcharges for more then 12K. The beauty of this system is that it would encourage mass transit usage, reduce overcrowding on roadways and reduce auto emissions.
It’s about time. This should have benn done 20 years ago. Talk about things moving slowly. HOWEVER, there is more that needs to be done.
Auto insurers MUST move to system based on TRUE exposure. Exposures related to territory seems to be moving in that direction. Now we need to establish a mileage threshold (say 12,000 miles anniually) for rating purposes. A credit for driving under the threshold as well as a surcharge for going over. This is a system tryuly based on exposure. After all, isn’t risk based against exposure and exposure equal to rate/premium charged. Insurance wasn’t designed to socialized it was designed to be calculed off tru exposure.
Are you going to allow your auto insurance company to audit your odometer? How will they adjust for miles driven on borrowed or rented cars?
Let them install Trip Sensor data recording devices on every vehicle, solely for the purpose of recording miles driven. As long as its regulated, why not. Let them use all other data strictly for research purposes.
There are several technologies that can be utilized. In fact, voluntary reporting could be an option. People will cheat, you say. Well, we know that fooling with an odemeter reading is serious business. An audit performed when the car is sold (odometer reading is necessary at that time) would be one solution. And, make mis-statements carry the same penalty as “other” insurance fraud.
Also, instead of territories, why not use zip codes as they would relate directly to census data. Population density equals increased risk equals higher prem,iums.
Lets say we allow the insurance companies to rate based upon mileage…
We must then limit (cap) the amount an insurance can any driver for insurance coverage.
If the threshold is 12000 miles…We must limit the insurance premium to $1200.00 annually for this same car..
If the carrier attempt to charge the insured more than the above then lets charge the insurance carrier with fraud using the “other fraud” section.
If the insured can be expected to cheat..So can the insurer…
Fair is Fair!
It is not correct to state that the territorial rate caps were put in place because urban rates were soaring. Only one community – Newark – received a significant benefit ( about 26% reduction) when the capes went into effect. Now, about 12 or so urban areas have rates that are artificially capped – at the expense of suburban and rural territories.
Has anyone in the industry ever noticed that the industry itself cannot correct simple problems. TO PROVE MY POINT LOOK AT INSURANCE CAPTIVES. THEY PRODUCE POSITIVE RESULTS AND UNDERWRITING PROFITS IN THE SAME AREAS THE INSURANCE INDUSTRY CANNOT! Luck, I doubt it.
I believe the insurance industry (like government) doesn’t want to fix problems because it may mean lower revenues (although there will be increased profits) and reduced staffing. Just take a look at the Department of Insurance. Has anyone ever tried to fix a simple problem or have them address a “new direction”. IMPOSSIBLE!
Lets face it. Insurance is a great concept. What we need is less oversight in the developmental stages. Stifle creativity and you stifle the future.
Lets do away the bureacracy. And lets start fixing problems.
RAY PLEASE GO AWAY
Ray is Correct!!!
Please take a look at some relevant information on review .
I have been trying for well over 20 years (through numerous presentations to the NJ Dept of Insurance, insurnce companies, etc.) to change the methodology of auto insurance rating from territory/age, etc. to a mileage based system. Now, it seems that Progressive introuded this concept this past week in Iowa on a trial basis.
Not only would this be a much more practical approach, but with technology we now have, we can track (in real time through a web browser – with statistical storage) not only mileage but also speed of the vehicle, etc.
My plan calls for a combination of rating factors including home zip code and actual miles driven. My model provides for 12,000 miles per year with credits applied for less then 12K and surcharges for more then 12K. The beauty of this system is that it would encourage mass transit usage, reduce overcrowding on roadways and reduce auto emissions.
By the way, my post was the first on this topic.