A new survey is reporting that 80 percent of drivers and 64 percent of homeowners in non-coastal areas in two states disagree with state insurance pricing regulations that benefit risky drivers and homeowners in high-risk coastal areas.
The “Consumer Opinions on Insurance Price Regulation” survey, commissioned by the American Consumer Institute, a Reston, Virginia consumer research organization, also found the majority of respondents surveyed do not believe state insurance regulations benefit consumers and they should be reduced.
The study looked at two states where insurance price regulation currently exists – Massachusetts and North Carolina. The survey asked 400 inland insurance consumers — those living more than one hour or 60 miles from the shore — in each state if they were aware of cross-subsidies in automobile and homeowner premiums, and what their attitudes were toward these cross-subsidies.
The survey also asked the 800 inland consumers whether they believe that price regulation actually benefits consumers.
The survey found:
The majority of surveyed consumers were unaware that inland homeowners subsidize coastal property owners (84%) and that good drivers subsidize risky drivers (60%).
According to the survey, 26% and 17% of consumers approved of cross-subsidies for coastal homeowners and risky drivers, respectively. In contrast, 64% of surveyed homeowners and 80% of surveyed drivers disagreed with the policy to cross-subsidize insurance.
Of those surveyed, 23% believed that state insurance regulations benefited consumers, while 51% thought that regulations did not benefit consumers in their state. A total of 58% of surveyed consumers would prefer less insurance regulation, while only 12% believed that more regulation should be considered.
The ACI said the survey results should give policymakers food for thought.
“Consumers do not approve of policies that overcharge good drivers so that bad drivers can pay less, because they reward risky drivers and result in more accidents, higher insurance claims and traffic fatalities,” said Steve Pociask, ACI president. “Consumers also do not want policies that give handouts to more affluent costal property owners at the expense of other, often less affluent, homeowners. It is critical that state regulators and policymakers terminate unfair price regulations.”
The study maintains that there “exists no empirically-based economic evidence to justify price insurance regulation.”
“The assertion that these state regulations are in the public interest is insufficient and is a view not shared with the public at large,” the study says.
The organization said its survey was released in anticipation of a bill expected to be introduced in the U.S. House of Representatives by Ed Royce, R-Calif., which would change insurance regulation by granting insurance companies the option of being regulated under a national system rather than the current state-based system.
The House bill would mirror Senate Bill 40, the “National Insurance Act of 2007,” introduced by Senators John Sununu, R-N.H., and Tim Johnson, D-S.D. last month.
“We applaud Congress’ efforts to modernize the insurance industry in a way that ensures efficiencies are streamlined, competition flourishes and consumers experience maximum benefits and protection,” said Pociask.
Source: American Consumer Institute Center for Citizen Research
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