Imagine if you will
A business going to your legislature and saying \”that mean old insurance company won\’t insure me any more. The reps then ask why they won\’t insure and the business owner says.
Well, we make a product. A few people who use our product get hurt. But we employ people and provide jobs. A few employees get hurt but they know the work is dangerous when they take the job.
DO YOU REALLY THINK the solution is an assigned risk of any sort to provide insurance for a dangerous product and a dangerous workplace?
That is exactly what assigned risk auto does. And it does it with no opportunity for profit for the companies recieving the assignments. They only have the opportinity for a loss and good drivers indirectly pick up the bill for it.
What does the current CAR system do? For that matter, what does the entire Mass auto system do if not subsidize bad drivers?
But for the matter of undesirable drivers, if the state mandates insurance for drivers no insurer wants, they have to force the insurers to take the drivers. Spreading it by market share is much more equitable than the current ERP system.
So is there a comparable way to handle uninsured drivers? I don\’t think performance bonds work for individual drivers. If you agree with that, then which is better, CAR or assigned risk?
My main business for the past 20 years has been insuring hard to place risks. In that time I have not used the auto assigned risk program (Texas) at all. If you can show the companies how they can make a nickel they will write the risk.
Have you never had a risk that no insurer would touch? I find that surprising but it could happen in TX where insurers have a little more freedom to set rates. But in MA, there are so many restrictions that there are a lot of drivers no insurer could make a nickel on.
Most assigned risk autos are for personal auto.
My favorites are:
A guy who had four accidents when he was referred to me. Turns out he had a cataract on one eye and diminished periferal vision in the other. A couple months after I wrote him he got his cataract fixed. No losses ever in our agency – it\’s been 5 years.
The other was a guy with epilepsy. State Farm had non-renewed him for an accident he had.
His medicine tended to get off about every three years or so.
State Farm would write him when his record cleared. Then non-renew after his accident.
The state never caught on to his problem. The police would always suspect he\’d gone to sleep and in an after-siesure stupor he didn\’t say much.
Finally after 14 years he had a siesure going out of his driveway and ran all over his neighbor\’s yard. The cop didn\’t think he went to sleep. Our bill was $180.
So State Farm got the big bills, we got the right premium for the risk. And he\’s still insured with the company we started him with. Now he has to do a med report each year to renew his license, which really should have been the case all along.
Those are great success stories but have you ever had a risk you couldn\’t get any insurer to touch? And have you had cases where the driver didn\’t buy because he couldn\’t afford the premium the insurer wanted to take the risk?
If yes to either, I hope you will concede that sometimes some sort of placement mechanism is necessary.
I had a guy once who wanted to do a business where you could buy-an-insult. His people would go out, sort of like a singing telegram, and tell off your victim for you. They wanted to include pies in the face. We figured that after the first assault charge he\’d be out of business. No quote was provided.
I regularly talk to would-be long hall truck drivers who cannot pay for their rig and insurance at the same time.
Is the purpose of an assigned risk program to subsidise premium payments? If so just enlarge your welfare program and quit throwing charges to your good risks.
Subsidized premiums are not the purpose but are the consequence of assigned risk. Companies can\’t make money on these risks and if the plan charged adequate premium, very few could afford it.
On most issues, I tend to your laisser faire views but I like the fact that if some bozo runs into me, he more than likely has insurance. So if we want every other guy to be insured, we have to allow for the uninsurable – a necessary evil. In personal auto, those that can\’t afford both their car payment and insurance are likely to go without the latter.
Oh ok. The \”idea\” that the clown may get arrested does not stop him/her from driving. Once those clowns kill few hundred people, we get to put them in jail! Wow – that\’s great! Makes me feel save driving in I-93 (ever drove there?)
Anyway, to some people that might worth the extra premium, to other it might not, right? HENCE the trade-off that the state administers, which is acceptable to most people (whether it\’s moral / fair / or whatever). It\’s just they currently do it in a manner that is too restictive, unfair to carriers and does not allow for competition.
Look at each state\’s mandatory liability limits. NONE of them are enough to pay for even a broken leg, much less something more serious.
In the old Uganda, before a couple of revolutions ago, the police had the authority to sumarily execute drunk drivers right there in the street.
I really don\’t think we should go that far with uninsured drivers.
A. \”Arrest the bum if he drives without insurance. Auction his car if he can\’t pay the fine. Put him in prison if he keeps it up or has an accident without insurance to pay for it.\”
B. \”In the old Uganda, before a couple of revolutions ago, the police had the authority to sumarily execute drunk drivers right there in the street. I really don\’t think we should go that far with uninsured drivers.\”
So, which is it? In either case, the first (A) alternative to ARP does not work since those laws existed before and after mandatory car insurance and we still had a large number of uninsured drivers.
The second, well, even you don\’t think that\’s a good idea. I concur. Now that we have exhausted law enforcement alternatives, perhaps the state can administer Assigned Risk Plan?
So, what to do… what to do…
Look. I agree with you that the current system sucks and unfair, so is ARP or any other \”vehicle\” to cede high-risk drivers. But the only other alternative to ARP is \”Uganda\’s way\”. For some wierd reason people have not yet considered it yet. Maybe because US is different from Uganda, maybe for other reasons. I don\’t know. I do know that, thus, we are left with the ONLY alternative available.
Well the reality is that the percentage of uninsured drivers is within a couple percentage points of the uninsured drivers before they made it mandatory.
The purpose of liability insurance is to defend the insured if he can be defended. If defense doesn\’t work or there is no defense of the accident the liability is to pay what the insured owes the other party up to thi limits of the policy limits.
With that in mind, close to indigent people have no financial concerned about being sued.
State mandated limits – none of them – are high enough to pay for pretty minor injuries.
So making them buy liability insurance is like making an 18 year old buy a medicare supplement. It doesn\’t apply to them. Therefore they see no value in it.
Someone with assets is a different picture. They have something to lose. They don\’t buy minimum state mandated limits.
Now with those perameters of ineffectiveness, mandatory liability is the most impotent set of laws ever passed in the free world.
True no-fault insurance is the answer. We have no true no-fault insurance in the US. Pass a threshhold in the US and you can still sue.
True no-fault is not populat with the legal group because they are entirely left out of the loop except in cases of breach of contract. No after-trieal party with that.
Also no revenge agaist that _ _ _ _ that ran over your family member.
So I don\’t know if there is any solution on the horizon.
I will second Yoko\’s comment since I could not have said it better. She always was quite eloquent. Assigned risk plan is a first and necessary step toward competitive business environment, which, generally, requires less regulation simply because of competition. The apparent end goal is, of course, competitive rating for personal auto, which could not exist without ARP in place given mandatory car insurance in Massachusetts.
ARP required?? In Texas auto insurance was freed up in the early 90s. Competition in the high risk auto arena forced rates down about 30% over the following decade. Refer back to my statement on not using the assigned risk auto pit for the past 20 years while writing some of the most scary drivers. A captive agent likely needs the assigned risk but an independent with an open marketplace does not need it in Texas.
I think that you are missing the point. Yes, 99.99% of drivers CAN be insured if insurance, just like any other product, is competitively priced. It isn\’t in Massachusetts right now.
Now, what price would you charge a driver with numerous speeding tickets, several recent at-fault accidents, bunch of moving violations, driving under influence and CONVICTED of auto insurance fraud? Does $2,000 a month sound reasonable? Perhaps. Is it reasonable to expect that this product will be purchased? I don\’t think so. Then, what does the state, which considers auto insurance mandatory, do in this situation then?
How about several Driving While Intoxicated tickets, two accidents, and an attempted murder with auto?
There is competition for this clown.
Is it morally right to send the people on the road his insurance bill? I say no.
A taxi is cheaper than the insurance and upkeep on his car. He shouldn\’t be on the road and I\’ll be damned if I\’ll send his insurance bill to someone else, which is what an under-priced assignment does.
Again, you are missing the point. I personally hate paying more so that those clowns can get insurance and drive into my neighbor’s yard over and over again. Now, morals aside, the state has a responsibility to its citizens and its citizens generally want every driver insured. Let’s assume there is competition for the clown you are describing.
Can that clown afford insurance? I’d say no.
SHOULD that clown driving? I’d say no.
Do I believe / think that this clown will be taking a taxi or a bus? I’d say no.
So, I will repeat the question: what does the state (which has responsibility to its citizens and considers auto insurance mandatory because its citizens want it that way), do in this situation?
Now I understand. You don\’t understand that the state\’s money is from the pockets of people trying to pay their own bills.
The clown doesn\’t have the right to hold you up in a parking lot. He doesn\’t have the right to have the state hold you up for him. You people in MA may think it\’s ok to subsidize irresponsible behavior. It\’s no wonder you are paying so much.
As I said, I am one of those that pay for the clown\’s insurance. So, I do understand. And you are right: not the clown, nor the state has the right to hold us up. Since carriers (business community) refuse to take those drivers at acceptable TO DRIVERS rates and it is evident that those risky drivers still drive on the road, I will ask you the same question:
What does the state (as in government – civil community) do in this situation?
If I as a consumer feel that 25 cents should be the right price for a cheeseburger do you think the local burger hut should sell it at that price? Prices are dictated by the cost, not your feelings.
Arrest the bum if he drives without insurance. Auction his car if he can\’t pay the fine. Put him in prison if he keeps it up or has an accident without insurance to pay for it.
Imagine if you will
A business going to your legislature and saying \”that mean old insurance company won\’t insure me any more. The reps then ask why they won\’t insure and the business owner says.
Well, we make a product. A few people who use our product get hurt. But we employ people and provide jobs. A few employees get hurt but they know the work is dangerous when they take the job.
DO YOU REALLY THINK the solution is an assigned risk of any sort to provide insurance for a dangerous product and a dangerous workplace?
That is exactly what assigned risk auto does. And it does it with no opportunity for profit for the companies recieving the assignments. They only have the opportinity for a loss and good drivers indirectly pick up the bill for it.
What does the current CAR system do? For that matter, what does the entire Mass auto system do if not subsidize bad drivers?
But for the matter of undesirable drivers, if the state mandates insurance for drivers no insurer wants, they have to force the insurers to take the drivers. Spreading it by market share is much more equitable than the current ERP system.
States and municipalities provide performance bonds for contractors to build public buildings. They don\’t force-issue them.
So is there a comparable way to handle uninsured drivers? I don\’t think performance bonds work for individual drivers. If you agree with that, then which is better, CAR or assigned risk?
Or, do I misunderstand your point?
My main business for the past 20 years has been insuring hard to place risks. In that time I have not used the auto assigned risk program (Texas) at all. If you can show the companies how they can make a nickel they will write the risk.
Have you never had a risk that no insurer would touch? I find that surprising but it could happen in TX where insurers have a little more freedom to set rates. But in MA, there are so many restrictions that there are a lot of drivers no insurer could make a nickel on.
Most assigned risk autos are for personal auto.
My favorites are:
A guy who had four accidents when he was referred to me. Turns out he had a cataract on one eye and diminished periferal vision in the other. A couple months after I wrote him he got his cataract fixed. No losses ever in our agency – it\’s been 5 years.
The other was a guy with epilepsy. State Farm had non-renewed him for an accident he had.
His medicine tended to get off about every three years or so.
State Farm would write him when his record cleared. Then non-renew after his accident.
The state never caught on to his problem. The police would always suspect he\’d gone to sleep and in an after-siesure stupor he didn\’t say much.
Finally after 14 years he had a siesure going out of his driveway and ran all over his neighbor\’s yard. The cop didn\’t think he went to sleep. Our bill was $180.
So State Farm got the big bills, we got the right premium for the risk. And he\’s still insured with the company we started him with. Now he has to do a med report each year to renew his license, which really should have been the case all along.
Those are great success stories but have you ever had a risk you couldn\’t get any insurer to touch? And have you had cases where the driver didn\’t buy because he couldn\’t afford the premium the insurer wanted to take the risk?
If yes to either, I hope you will concede that sometimes some sort of placement mechanism is necessary.
I had a guy once who wanted to do a business where you could buy-an-insult. His people would go out, sort of like a singing telegram, and tell off your victim for you. They wanted to include pies in the face. We figured that after the first assault charge he\’d be out of business. No quote was provided.
I regularly talk to would-be long hall truck drivers who cannot pay for their rig and insurance at the same time.
Is the purpose of an assigned risk program to subsidise premium payments? If so just enlarge your welfare program and quit throwing charges to your good risks.
Subsidized premiums are not the purpose but are the consequence of assigned risk. Companies can\’t make money on these risks and if the plan charged adequate premium, very few could afford it.
On most issues, I tend to your laisser faire views but I like the fact that if some bozo runs into me, he more than likely has insurance. So if we want every other guy to be insured, we have to allow for the uninsurable – a necessary evil. In personal auto, those that can\’t afford both their car payment and insurance are likely to go without the latter.
Oh ok. The \”idea\” that the clown may get arrested does not stop him/her from driving. Once those clowns kill few hundred people, we get to put them in jail! Wow – that\’s great! Makes me feel save driving in I-93 (ever drove there?)
Anyway, to some people that might worth the extra premium, to other it might not, right? HENCE the trade-off that the state administers, which is acceptable to most people (whether it\’s moral / fair / or whatever). It\’s just they currently do it in a manner that is too restictive, unfair to carriers and does not allow for competition.
HENCE, the much needed reform!
Look at each state\’s mandatory liability limits. NONE of them are enough to pay for even a broken leg, much less something more serious.
In the old Uganda, before a couple of revolutions ago, the police had the authority to sumarily execute drunk drivers right there in the street.
I really don\’t think we should go that far with uninsured drivers.
Ok. Which one works better then? You said:
A. \”Arrest the bum if he drives without insurance. Auction his car if he can\’t pay the fine. Put him in prison if he keeps it up or has an accident without insurance to pay for it.\”
B. \”In the old Uganda, before a couple of revolutions ago, the police had the authority to sumarily execute drunk drivers right there in the street. I really don\’t think we should go that far with uninsured drivers.\”
So, which is it? In either case, the first (A) alternative to ARP does not work since those laws existed before and after mandatory car insurance and we still had a large number of uninsured drivers.
The second, well, even you don\’t think that\’s a good idea. I concur. Now that we have exhausted law enforcement alternatives, perhaps the state can administer Assigned Risk Plan?
So, what to do… what to do…
Look. I agree with you that the current system sucks and unfair, so is ARP or any other \”vehicle\” to cede high-risk drivers. But the only other alternative to ARP is \”Uganda\’s way\”. For some wierd reason people have not yet considered it yet. Maybe because US is different from Uganda, maybe for other reasons. I don\’t know. I do know that, thus, we are left with the ONLY alternative available.
Well the reality is that the percentage of uninsured drivers is within a couple percentage points of the uninsured drivers before they made it mandatory.
The purpose of liability insurance is to defend the insured if he can be defended. If defense doesn\’t work or there is no defense of the accident the liability is to pay what the insured owes the other party up to thi limits of the policy limits.
With that in mind, close to indigent people have no financial concerned about being sued.
State mandated limits – none of them – are high enough to pay for pretty minor injuries.
So making them buy liability insurance is like making an 18 year old buy a medicare supplement. It doesn\’t apply to them. Therefore they see no value in it.
Someone with assets is a different picture. They have something to lose. They don\’t buy minimum state mandated limits.
Now with those perameters of ineffectiveness, mandatory liability is the most impotent set of laws ever passed in the free world.
True no-fault insurance is the answer. We have no true no-fault insurance in the US. Pass a threshhold in the US and you can still sue.
True no-fault is not populat with the legal group because they are entirely left out of the loop except in cases of breach of contract. No after-trieal party with that.
Also no revenge agaist that _ _ _ _ that ran over your family member.
So I don\’t know if there is any solution on the horizon.
I will second Yoko\’s comment since I could not have said it better. She always was quite eloquent. Assigned risk plan is a first and necessary step toward competitive business environment, which, generally, requires less regulation simply because of competition. The apparent end goal is, of course, competitive rating for personal auto, which could not exist without ARP in place given mandatory car insurance in Massachusetts.
ARP required?? In Texas auto insurance was freed up in the early 90s. Competition in the high risk auto arena forced rates down about 30% over the following decade. Refer back to my statement on not using the assigned risk auto pit for the past 20 years while writing some of the most scary drivers. A captive agent likely needs the assigned risk but an independent with an open marketplace does not need it in Texas.
Hal,
I think that you are missing the point. Yes, 99.99% of drivers CAN be insured if insurance, just like any other product, is competitively priced. It isn\’t in Massachusetts right now.
Now, what price would you charge a driver with numerous speeding tickets, several recent at-fault accidents, bunch of moving violations, driving under influence and CONVICTED of auto insurance fraud? Does $2,000 a month sound reasonable? Perhaps. Is it reasonable to expect that this product will be purchased? I don\’t think so. Then, what does the state, which considers auto insurance mandatory, do in this situation then?
How about several Driving While Intoxicated tickets, two accidents, and an attempted murder with auto?
There is competition for this clown.
Is it morally right to send the people on the road his insurance bill? I say no.
A taxi is cheaper than the insurance and upkeep on his car. He shouldn\’t be on the road and I\’ll be damned if I\’ll send his insurance bill to someone else, which is what an under-priced assignment does.
Again, you are missing the point. I personally hate paying more so that those clowns can get insurance and drive into my neighbor’s yard over and over again. Now, morals aside, the state has a responsibility to its citizens and its citizens generally want every driver insured. Let’s assume there is competition for the clown you are describing.
Can that clown afford insurance? I’d say no.
SHOULD that clown driving? I’d say no.
Do I believe / think that this clown will be taking a taxi or a bus? I’d say no.
So, I will repeat the question: what does the state (which has responsibility to its citizens and considers auto insurance mandatory because its citizens want it that way), do in this situation?
Now I understand. You don\’t understand that the state\’s money is from the pockets of people trying to pay their own bills.
The clown doesn\’t have the right to hold you up in a parking lot. He doesn\’t have the right to have the state hold you up for him. You people in MA may think it\’s ok to subsidize irresponsible behavior. It\’s no wonder you are paying so much.
As I said, I am one of those that pay for the clown\’s insurance. So, I do understand. And you are right: not the clown, nor the state has the right to hold us up. Since carriers (business community) refuse to take those drivers at acceptable TO DRIVERS rates and it is evident that those risky drivers still drive on the road, I will ask you the same question:
What does the state (as in government – civil community) do in this situation?
Please try to asnwer this question.
If I as a consumer feel that 25 cents should be the right price for a cheeseburger do you think the local burger hut should sell it at that price? Prices are dictated by the cost, not your feelings.
Hal:
The question I asked was not about pricing or how fair it is. Frankly, at this point it is irrelevant.
AGAIN, for the 3rd time: \”What does the state (as in government – civil community) do in this situation?\”
Just need an answer. So, please… enlighted me.
Arrest the bum if he drives without insurance. Auction his car if he can\’t pay the fine. Put him in prison if he keeps it up or has an accident without insurance to pay for it.