Monday’s Post 2.6.12 - The Consumer Federation of America released a report saying auto insurance rates have become to expensive for low-income drivers. Auto insurance carriers rejected their report’s findings which states further regulation of the auto insurance industry would do little good to help policyholders. The president of the Insurance Information Institute (III) said that more regulations would reduce competition among car insurance, leading to spiking car insurance rates for policyholders. According to him, the best way to deal with skyrocketing car insurance rates is by controlling primary factors such as healthcare services and reducing loopholes in the auto insurance claims system. An overall shift in car insurance rate regulation would destabilize the current system that enables insurers’ to project future risks more accurately.
The Property and Casualty Insurers Association of America (PCI) also added its objections to the calls for more car insurance rate regulation. Such regulations would only hinder consumers from enjoying more innovative insurance products and limiting their choices and the pricing their offered. However, PCI does feel cutting car insurance rate state liability minimums might actually benefit some buyers. They argue that lowering a states minimum required car insurance rate liability limits will obviously attract those uninsured drivers to buy automobile insurance coverage leading to overall rate reductions across the board. The problem is with state minimum automobile insurance coverage is insufficient in case of serious accidents, which might force drivers to use personal savings leading to debt.
The CFA report credited insurance companies for disregarding a persons income when setting automobile insurance coverage rates. However, the reports also say a drivers occupation, street address, credit history, education and driving history cause income to be irrelevant. Insurance pundits were quick to point out that this information was necessary to accurately establish risk and did not relate to income earned.
Michael E. Dortch
President & Managing Agent
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania 19446
(800) 807-0762 ext. 602