This article is missing much of the info found in other articles. The two drivers had different records and limits. The receptionist had a 45 day lapse, renter and wanted minimum limits. The other driver had higher limits, no lapse and was a homeowner. The accident only had 800 in damage, which is such a low amount, it might not have even been usable for a surcharge. You cannot compare these two and draw any conclusions. It’s like comparing and cat and a dog, both are animals and both have fur……but that is about it. Poor study and poor reporting by IJ leaving out much of the facts.
Perhaps the CFA study should look at the TV ads where the big boys like Allstate, GEICO, State Farm, 21st Century(Farmers)& Progressive proudly proclaim that they can save us $500 on our Auto premiums. Flo even says we can pick our own premium. To me, this is the heighth of false advertising. Make them prove that they can actually do it on the same customer. I would like to see a quote on the same customer, same limits and coverage and see how they shake out.
All advertising numbers are gleaned from favorable information, and these are no different. It doesn’t make them untrue. In most cases they compare the savings on people who actually switched carriers, so of course it skews toward saving money; otherwise the person wouldn’t have left their current carrier. Pay attention to the wording of the proclamations “could” save you 15%, on “average” drivers who “switched” saved $xxx. Flo letting you pick your own is just switching the order of how you choose coverages/limits, so you pick a price limit and they select the highest limits under that limit.
If you want to see how they shake out for the same customer, limits and coverage, then go get a quote from each for yourself. It’ll take all of 20-30 minutes. I bet you could do all 120 fake quotes that the CFA did in less than a day. Not very “labor intensive” if you ask me.
Using the CFA’s own survey, the executive got the lower rate 30 times but the receptionist got the lower rate 21 times. So how can you possibly use that ratio to ‘prove’ that insurers charge lower income drivers more despite their driving record?
The fact is that the CFA survey is fatally flawed because they don’t use an exact comparison and the CFA’s Bob Hunter, a former actuary, knows this and yet was still intentionally dishonest in his news release. One more reason to never believe a word Bob Hunter says.
Hey, as long as they slam Allstate, GEICO, Farmers, and Progressive, I’m happy! State Farm is a little better, but you’re always better off checking with an independent agent.
It is a violation of an individual’s constitutional protection for an insurer to procure higher premiums due to anything other than driving record and claims history.
Right now an insurance company can even rate according to the general reputation of the individual. This is in their disclaimers.
Most popular is zip code, credit score, marital status and occupation. All of which have nothing to do with driving record or claims history.
Insurer’s need to face the truth that they in fact are red lining. There rating practices obviously are flawed and have failed the consumer.
Rates have doubled since insurers began using credit profiling and are in a losing battle in trying to predict which policy holders are less likely to have claims.
It should be illegal for insurers to do anything other than ask for proof of prior insurance, driving record and claims history.
It is an abomination that even one person is charged a higher rate because they fell into a stereo type of where they live, what they do for a living, and how many bills they owe.
I don’t know where you get the information that ‘rates have doubled’ since insurers began using credit information. In my state, rates have dropped for eight straight years and are now down 30% in that time frame….all of which are within the timeframe that insurers have used credit.
Also in my state, there is a law that prohibits your driving record from indicating any speeding violations that are for less than nine miles per hour over the speed limit. And, many municipalities engage in allowing ‘continuence for dismissal’ where the violator is allowed to pay an additional fee and not get another ticket in that jurisdiction and the violation is held in abeyance and eventually dismissed so that it never appears on the driving record. So in my state, the driving record empirically does NOT indicate true driving risk.
The ratings process works well now and affords many a rightly deserved discount. Your idea of properly rating would mean many people would pay a much higher rate to subsidize drivers who are much higher risk.
Eventually this will all be unnecessary anyway as telemetrics takes over and is shown to be the absolute best predictor or driving risk.
There are so many games being played by carriers that we as agents have a lot of trouble decyphering them. The bundling game starts with a quoted premium and if you have a companion policy, you get extra credits to reduce it. Then, they have early quoting discounts, paid in full discounts etc. The score is a big determining factor, but violations and at fault accidents are big also. Allstate will quote someone as if they are clear, get the customer in, pay the premium and then run the reports. Many insureds are disappointed that the premium invariably goes up. I get frustrated that quotes sometimes don’t stick for one factor or another. It is a very complicated system and companies are guilty of trying to build a better mouse trap and all they do is muddy the water.
30% less premium for whom? For folks who don’t owe money? 20 years ago the average min liability policy was around $50 for six months for anyone with a good driving record, between the ages of 30 and 50. Now it is almost $200 for the best credit, no tickets, no accidents. Less, of course, if their married.
You are seriously trying to compare prices from 20 years ago to today. Of course rates are up from 20 years ago. Inflation alone is 60% higher. Medical inflation is 110% higher. The top selling car in 1993 was the Ford Taurus which cost $15,700 back then.
To try to say that credit scoring has caused rates to more than double since 20 years ago is a real stretch.
Liablity and medical costs have exploded since then. Premiums genearlly follow claims costs and since claims costs are higher since 20 years ago then premiums will be too, but it’s not because of credit scoring.
In fact, if you didn’t allow credit scoring, the EXACT SAME amount of premium would be collected, it just would be allocated differently. Rates would not go down. Credit is used solely as a predictor, not as a way to raise more revenue.
In my state the average overall annual premium (paid by the average person) was more than $900 just seven years ago. Today it is under $700 for the same average policy. Average rates have dropped a lot in the last seven years.
Hey Wily, I have seen people that have paid off their mortgage, cars, put their kids through college and paid off their loans get a worse score than people with credit cards up the kazoo. The score doesn’t reflect the responsible people in many cases. They want to see people using credit and paying monthly charges to get a good score. The people that don’t have any obligations are being penalized.
This article is missing much of the info found in other articles. The two drivers had different records and limits. The receptionist had a 45 day lapse, renter and wanted minimum limits. The other driver had higher limits, no lapse and was a homeowner. The accident only had 800 in damage, which is such a low amount, it might not have even been usable for a surcharge. You cannot compare these two and draw any conclusions. It’s like comparing and cat and a dog, both are animals and both have fur……but that is about it. Poor study and poor reporting by IJ leaving out much of the facts.
Perhaps the CFA study should look at the TV ads where the big boys like Allstate, GEICO, State Farm, 21st Century(Farmers)& Progressive proudly proclaim that they can save us $500 on our Auto premiums. Flo even says we can pick our own premium. To me, this is the heighth of false advertising. Make them prove that they can actually do it on the same customer. I would like to see a quote on the same customer, same limits and coverage and see how they shake out.
All advertising numbers are gleaned from favorable information, and these are no different. It doesn’t make them untrue. In most cases they compare the savings on people who actually switched carriers, so of course it skews toward saving money; otherwise the person wouldn’t have left their current carrier. Pay attention to the wording of the proclamations “could” save you 15%, on “average” drivers who “switched” saved $xxx. Flo letting you pick your own is just switching the order of how you choose coverages/limits, so you pick a price limit and they select the highest limits under that limit.
If you want to see how they shake out for the same customer, limits and coverage, then go get a quote from each for yourself. It’ll take all of 20-30 minutes. I bet you could do all 120 fake quotes that the CFA did in less than a day. Not very “labor intensive” if you ask me.
Using the CFA’s own survey, the executive got the lower rate 30 times but the receptionist got the lower rate 21 times. So how can you possibly use that ratio to ‘prove’ that insurers charge lower income drivers more despite their driving record?
The fact is that the CFA survey is fatally flawed because they don’t use an exact comparison and the CFA’s Bob Hunter, a former actuary, knows this and yet was still intentionally dishonest in his news release. One more reason to never believe a word Bob Hunter says.
Hey, as long as they slam Allstate, GEICO, Farmers, and Progressive, I’m happy! State Farm is a little better, but you’re always better off checking with an independent agent.
A CFA study with flaws? Say it ain’t so!
It is a violation of an individual’s constitutional protection for an insurer to procure higher premiums due to anything other than driving record and claims history.
Right now an insurance company can even rate according to the general reputation of the individual. This is in their disclaimers.
Most popular is zip code, credit score, marital status and occupation. All of which have nothing to do with driving record or claims history.
Insurer’s need to face the truth that they in fact are red lining. There rating practices obviously are flawed and have failed the consumer.
Rates have doubled since insurers began using credit profiling and are in a losing battle in trying to predict which policy holders are less likely to have claims.
It should be illegal for insurers to do anything other than ask for proof of prior insurance, driving record and claims history.
It is an abomination that even one person is charged a higher rate because they fell into a stereo type of where they live, what they do for a living, and how many bills they owe.
I don’t know where you get the information that ‘rates have doubled’ since insurers began using credit information. In my state, rates have dropped for eight straight years and are now down 30% in that time frame….all of which are within the timeframe that insurers have used credit.
Also in my state, there is a law that prohibits your driving record from indicating any speeding violations that are for less than nine miles per hour over the speed limit. And, many municipalities engage in allowing ‘continuence for dismissal’ where the violator is allowed to pay an additional fee and not get another ticket in that jurisdiction and the violation is held in abeyance and eventually dismissed so that it never appears on the driving record. So in my state, the driving record empirically does NOT indicate true driving risk.
The ratings process works well now and affords many a rightly deserved discount. Your idea of properly rating would mean many people would pay a much higher rate to subsidize drivers who are much higher risk.
Eventually this will all be unnecessary anyway as telemetrics takes over and is shown to be the absolute best predictor or driving risk.
There are so many games being played by carriers that we as agents have a lot of trouble decyphering them. The bundling game starts with a quoted premium and if you have a companion policy, you get extra credits to reduce it. Then, they have early quoting discounts, paid in full discounts etc. The score is a big determining factor, but violations and at fault accidents are big also. Allstate will quote someone as if they are clear, get the customer in, pay the premium and then run the reports. Many insureds are disappointed that the premium invariably goes up. I get frustrated that quotes sometimes don’t stick for one factor or another. It is a very complicated system and companies are guilty of trying to build a better mouse trap and all they do is muddy the water.
30% less premium for whom? For folks who don’t owe money? 20 years ago the average min liability policy was around $50 for six months for anyone with a good driving record, between the ages of 30 and 50. Now it is almost $200 for the best credit, no tickets, no accidents. Less, of course, if their married.
It’s more then doubled, Sir Charge Alot.
You are seriously trying to compare prices from 20 years ago to today. Of course rates are up from 20 years ago. Inflation alone is 60% higher. Medical inflation is 110% higher. The top selling car in 1993 was the Ford Taurus which cost $15,700 back then.
To try to say that credit scoring has caused rates to more than double since 20 years ago is a real stretch.
Liablity and medical costs have exploded since then. Premiums genearlly follow claims costs and since claims costs are higher since 20 years ago then premiums will be too, but it’s not because of credit scoring.
In fact, if you didn’t allow credit scoring, the EXACT SAME amount of premium would be collected, it just would be allocated differently. Rates would not go down. Credit is used solely as a predictor, not as a way to raise more revenue.
In my state the average overall annual premium (paid by the average person) was more than $900 just seven years ago. Today it is under $700 for the same average policy. Average rates have dropped a lot in the last seven years.
Hey Wily, I have seen people that have paid off their mortgage, cars, put their kids through college and paid off their loans get a worse score than people with credit cards up the kazoo. The score doesn’t reflect the responsible people in many cases. They want to see people using credit and paying monthly charges to get a good score. The people that don’t have any obligations are being penalized.
Hey Wily, are you by chance a Pee Dee agent?