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Watchdog group says new rules give insurance companies all the power

In many states in America, auto insurance is a requirement. This is a good thing since that means any accidents that happen will be sure to have coverage by both drivers. The problem according to some drivers and insurance companies is that drivers that drive more miles and have a higher chance of accidents pay the same amount as drivers who drive significantly less.

California is closer to allowing insurance companies to sell insurance by the mile to drivers. This would mean that drivers who drive more would pay more than others would. The Sacramento Bee reports that Insurance Commissioner Steve Poizner has released regulations that will permit and authorizes insurance companies to verify mileage as part of insurance plans based on miles driven.

The ultimate goal of the new insurance plan in California isn’t to save drivers money, but to encourage people to drive less. Less driving will reduce the pollution in California, the number of accidents and ease traffic congestion according to lawmakers. California isn't the only state with insurance plans based on miles driven. Texas has such plans provided by a company called MileMeter that offers six month policies with chunks of mileage ranging from 1,000 miles to 6,000 miles.

MileMeter CEO Chris Gay said, "We absolutely anticipate coming to California." He continued, "Our take is that half the market out there is being overcharged and underserved – and that's who we aim to address."

Conventional mileage based policies would reportedly take an estimate of projected mileage for a year and then refund or bill the driver depending on the actual miles driven. Mileage could be verified in several ways such as at smog check stations, DMV records, and via electronic devices attached to the car.

The fear with mileage based insurance plans is that there will be a push to charge drivers to drive longer distances each year more money in insurance rates. However, there is reportedly no plan to do that at this time.

Two thirds of homes in the country would save about $270 per year per car with mileage based plans according to a study from Brookings. However, Carmen Balber from Consumer Watchdog says that the new policies cater to the insurance industry and don’t require the premiums to reduce when driving does.

"I think the regulations were drafted to guarantee that insurers win, because they were left with all of the choice," Balber said.

Insurance companies are taking the new proposal seriously and Michael Gunning, VP of the Personal Insurance Federation of California said, "Given the competitive nature of the marketplace, I think this is going to be a selling point for companies."

The members of the federation write more than 50% of all auto policies in California. Drivers concerned about their privacy with policies requiring a device be connected to the car need not be concerned according to lawmakers. Regulations prevent the devices from recording location information about the vehicle. However, Balber maintains that the mileage devices give insurance companies a foot in the door to push for the right to collect other data. Future policies could possibly rate drivers higher if they drive in high crime areas frequently.

There are also proposals in the works that would regulate gas taxes on a per-mile basis using GPS tracking.


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California is stupid
By bradmshannon on 11/10/2009 11:04:50 AM , Rating: 4
I am no longer surprised at the collective stupidity of the California government. They are already like another country, so they might as well break from the herd. Too bad they need money from the other states just to operate.




RE: California is stupid
By mdogs444 on 11/10/2009 11:11:34 AM , Rating: 3
quote:
Too bad they need money from the other states just to operate.


No kidding. When are people going to realize that its complete stupidity to copy the models of California and New York. Look at the types of people who are running these states - they make all these regulations, encourage social weirdness, increase taxes on everything until you can no longer afford to buy anything, create entitlement programs for more money than they even bring in....then they basically go bankrupt, have skyrocketing unemployment numbers, need the states who didn't follow suit to fund them...and then they try to push off all their corny beliefs and values on the rest of middle America.

The sad part...is so many people in middle America want it! I guess they were right, you can't teach stupid.


RE: California is stupid
By Mint on 11/10/2009 12:16:04 PM , Rating: 4
You and bradmshannon need to stop spreading lies:
http://www.taxfoundation.org/research/show/266.htm...

In 2005, California only got $0.78 (NY $0.79) in spending for every dollar it gave to the federal gov't in taxes. In fact, most of the blue states did. For you to say 2009 has so radically shifted the balance is baseless speculation.

Whatever bailout CA needs absolutely pales in comparison to the >$40B/yr outflow that CA has been giving to the nation for years. Personally, though I just want higher state taxes because they impact the economy far less than claimed. I'm sick of people thinking it's okay to burden future generations with debt for selfish reasons.


RE: California is stupid
By wookie1 on 11/10/2009 12:40:13 PM , Rating: 2
The Califoria state government pays federal income taxes?! Or do you mean that the feds gave back to California 78% of what residents and businesses paid? If so, a rebate of "only" 78% is good? And now because California is large and has a large population, naturally they should be bailed out, or as you say state taxes should be jacked up. How about just returning to the spending levels (per capita) of several years ago? Even adjusted for inflation, I'm sure it wouldn't require tax increases or bailouts. Just continually increasing the size and scope of government will become a bigger and bigger weight, sinking the state financially.


RE: California is stupid
By Mint on 11/10/2009 1:03:37 PM , Rating: 2
If you're so confused why don't you just read the documents? Here's more info from the same site:
http://www.taxfoundation.org/research/topic/92.htm...

I'm talking about all federal taxes paid by California residents and businesses versus all federal spending recieved. The difference is what California pays to the rest of the nation to support their SS, Medicare, etc.

Reducing spending levels isn't enough, because they haven't really risen much compared to a few years ago. We need higher taxes, or have to completely eliminate programs like health insurance for children. People bitch about overpaid goverment employees but even halving their salary - which is just plain wrong and will reduce wages in the private sector, too - won't be near enough.


RE: California is stupid
By mdogs444 on 11/10/2009 1:10:03 PM , Rating: 3
And what does that tell you? It says there are too many liberal entitlement programs benefiting the lazy and penalizing the successful. Perhaps you SHOULD start cutting entitlement programs as a method of motivation for people to go to school, get an education, take their lives more seriously, and get a good job.


RE: California is stupid
By Mint on 11/10/2009 3:20:19 PM , Rating: 2
It's nice for you to think that everyone can have a decent job, but that's not how it works. The more productive we become, the less labour is needed for the things we want (i.e. that which we will pay for).

Right now we have low interest rates, stimulus, and people desperate for work (i.e. willing to work for less). There's never been a better time to produce something that society wants. The problem is that the demand just isn't there, and I can't blame society for coming to this realization. Cheap cars are fantastic. Cheap TV's are better than ever. Cheap entertainment is on the internet. Etc, etc. What's the point in spending?

Unemployment isn't going away. Either you eliminate minimum wage to replace automation and reduce productivity per employed person (which is ass-backwards), let poor people starve to death (which will reduce demand and just create more poor people), or live with the fact that social-capitalism is an inevitability in a moral society.

I really don't see what's so bad about it. If you are educated enough to outdo your peers and secure a job, then you get a better lifestyle. If not, then you live on welfare. Just tax enough to make it sustainable.

Rich people are coming to the same realization. That's why they voted for a "socialist" president. That's why productive states are usually blue and not complaining about net outflow. There's already enough encouragement for success, and there's no need to punish lack of it when it's unavoidable for some portion of the population.


RE: California is stupid
By weskurtz0081 on 11/10/09, Rating: 0
RE: California is stupid
By Spuke on 11/10/2009 1:41:17 PM , Rating: 3
quote:
We need higher taxes, or have to completely eliminate programs like health insurance for children.
I guess you're not familiar with how much CA government spending has increased. The CA government has more than doubled their spending in the last 10 years. More than double is damn significant. Hell, 10 years ago we were actually in the friggin green.

http://www.usgovernmentspending.com/California_sta...


RE: California is stupid
By Mint on 11/10/2009 2:54:09 PM , Rating: 2
10 years ago is not very useful as a comparison. State spending hasn't increased that much recently. It was $137B in 2006 and projected at $143B for 2010. There weren't big financing problems in 2006.

Also, I'm comparing the numbers to http://www.usgovernmentrevenue.com/California_stat... and I'm not sure how it all adds up. It looks like state is way in the green and local is way in the red. I guess there are transfer payments to the local municipalities? Why isn't the debt increasing by the difference between revenues and spending?


RE: California is stupid
By Keeir on 11/10/2009 1:11:04 PM , Rating: 3
quote:
In 2005, California only got $0.78 (NY $0.79) in spending for every dollar it gave to the federal gov't in taxes. In fact, most of the blue states did. For you to say 2009 has so radically shifted the balance is baseless speculation.


That concept has a (few) major flaw...

its not adjusted for relative cost of living (even within the states)

Consider the State of Washington. There is a dramatic cost of living (and thus wage scale) difference between Spokane, Olympia and Seattle. Most of the Federal Taxes are collected from the Seattle Area with High Profit business and high wage employees... Yet the majority is spent in -low wage- areas. So perhaps Washington should complaign they don't overpay people? Or spend money on I-90? At $0.88 per tax dollar, Washington probably gets very close to equal -value-.

Another major flaw is that the business in the State of Washington get significant value from money spent in other states. If Idaho, Montana, Utah, and the Dakotas did not have a good road system, goods from Washington would need to be shipped through the Panama Canal... which would cut into profit and thus federal taxes paid...

All that map shows is Population Density & Wealth Density.


RE: California is stupid
By Mint on 11/10/2009 4:05:08 PM , Rating: 3
Look, the fact is that CA and NY pay significantly more to the feds for the benefit of the nation than they get back, so anyone complaining about other states giving money to socialist CA should STFU. Your cost of living argument is a red herring.

If the federal government just asked NY and CA for $2000 per capita per year plus SS income deductions to pay for their share of defense, road work (do feds have anything to do with this?), and SS, and let those states handle welfare, medicaid, justice, trade, etc, then they would be swimming in cash while the rest of the nation would be a bit worse off.

I'm not advocating this by any means, as I'm all for richer states like CA/NY to give a little to advance the standard of living for everyone, and I recognize that they benefitted from the flow of trade and expertise between states.

I'm just saying people should stop making BS claims that CA "needs money from other states to operate". They're like kids with an allowance complaining that their mom asked them to buy some makeup for her with "their" money.


RE: California is stupid
By Keeir on 11/10/2009 6:47:16 PM , Rating: 2
quote:
Look, the fact is that CA and NY pay significantly more to the feds for the benefit of the nation than they get back, so anyone complaining about other states giving money to socialist CA should STFU. Your cost of living argument is a red herring.


Actually no, its not.

The fallacy is in measuring services/or benifit in Dollar amounts spent in a psuedo-geographical boundry.

So, when the Federal government gives a Nebraska Farmer a subsidy to ensure both cheap food prices AND a viable domestic farming industry, don't people in California and other blue states benefit with lower food prices? Much of the Nation's RD Science funds are spent in NM because of its remote location and lower cost of living (meaning lower over cost) than California. Doesn't California benefit from these programs as well? There is no way we can directly calculate the benefit in Dollars California receives from Federal Spending.

The distrabution of Federal Funds is what was intended during the setup of the Federal government. Rich or highly populated states can't wag the dog to ensure a higher than warranted Federal Spending in thier particular states. Ultimately, the Federal Government spending 1 to 1 dollar in California would be a negative for -California-.

quote:
I'm just saying people should stop making BS claims that CA "needs money from other states to operate". They're like kids with an allowance complaining that their mom asked them to buy some makeup for her with "their" money.


Hmmm.. Federal Dollars Collected to Support the Federal Good as decided by the House of Repersentatives, which California gets a larger influence in due to its larger size, are not equal to hand-outs to meet State Promised Goods and Services.

California, New York, and many other "Blue States" so far have been the primary beneficiaries of the TARP funds. So its not like they never receive more than thier fair share of direct Federal Spending.

California wanted a Auto Style Bailout. 'Give us money so we can sustain for a year the poor contract we wrote.' Notice that most people hate the Auto bailout's as well?


RE: California is stupid
By Solandri on 11/11/2009 5:09:45 AM , Rating: 2
quote:
Look, the fact is that CA and NY pay significantly more to the feds for the benefit of the nation than they get back, so anyone complaining about other states giving money to socialist CA should STFU. Your cost of living argument is a red herring.

The fed payment/benefit analysis needs to be controlled for individual income (which probably correlates closely with cost of living). The whole point of a progressive tax system is that richer people pay more. It's contradictory to tell rich people who complain about high taxes that they should shut up and pay their fair share, and in the next breath claim that richer states are somehow paying more than their fair share. The two are the same thing.


RE: California is stupid
By icanhascpu on 11/10/2009 11:14:15 AM , Rating: 3
I am no longer surprised at the collective stupidity of the American government. They are already like another world order, so they might as well break from the herd. Too bad they need money from the other countries just to operate.


RE: California is stupid
By mdogs444 on 11/10/2009 11:17:35 AM , Rating: 5
quote:
Too bad they need money from the other countries just to operate.

No kidding. Perhaps its because we pay people we don't like to talk to us, we give "aid" to all these countries but no one knows where that money actually goes, we basically fund the entire UN, and now they want to give hundreds of billions of dollars a year to "developing countries" to go green...

Then our leaders make us borrow all this money and put us into debt to do the basic things for ourselves? I think its time to stop being Nanny and cut the chains...leave the others to function on their own. Stop giving away money, stop altering the way we do things, that work, to please everyone else.


RE: California is stupid
By JediJeb on 11/10/2009 3:13:46 PM , Rating: 2
I agree. So many countries chant about how much they hate the US while at the same time have their hand out to receive support from us. What would happen if for just one year the US stopped sending any type of aid outside our borders? Spent every dollar that would have been sent out to pay off our debt. Let other countries give out the money and maybe even ask for some of it ourselves.

The US spent tons of money after World War II rebuilding the world, and guess what, only Japan has every repaid any of those loans. In my opinion Japan has paid for the right to compete against us in the markets where we sell our goods. The way things seem to work though is we pay others to become our competitors, it would be like Ford giving GM $20 billion to stay afloat and GM never paying it back but becoming so big in the market to take away all of Ford's customers. Just does not seem right to me.


RE: California is stupid
By TSS on 11/10/09, Rating: 0
RE: California is stupid
By Hink on 11/10/2009 5:42:35 PM , Rating: 2
Just to correct one fact. Compare the EU and US contributions to the UN budget with wikipedia and see that the EU coutries contributes with about 50% more than the US.

To help other nations is usually to help yourself, many countries buyes services from domestic companys to use abroad as aid.
This was the case with much of post-WW2 aid. Some people seems to think that it would have been better if sovjet would have given the aid(and requested other things) to ex. Europe instead of US, terrifying scenario to think about.


RE: California is stupid
By mmntech on 11/10/2009 11:23:06 AM , Rating: 2
It's baffling how a state the size of Canada (pop wise) is so deep in debt.

This mileage insurance scheme though is something that California environmentalists have been pushing for for some time. It gets people to drive less. Well, no, that's not entirely accurate. The environmentalists wanted to tax drivers per mile. Just be thankful this insurance method doesn't punish you for driving period.


RE: California is stupid
By mdogs444 on 11/10/2009 11:26:02 AM , Rating: 2
quote:
California environmentalists have been pushing for for some time. It gets people to drive less. Well, no, that's not entirely accurate. The environmentalists wanted to tax drivers per mile. Just be thankful this insurance method doesn't punish you for driving period.

If the environmentalists are pushing for it - then chances are it will cost you more - and provide yet another burden on your daily life all to please the enviro-whackos who want to go back to barney rubble days.


RE: California is stupid
By Mint on 11/10/2009 12:39:00 PM , Rating: 2
I'm usually railing against retard environmentalists, but this time conservatives should be joining the call.

Pay As You Drive insurance more accurately distributes the cost of driving among the people who drive. The only reason costs will rise is that insurance companies will stop being able to milk low-risk drivers to subsidize the higher-risk ones. Instead of me paying 2.5x the insurance per mile, I'll only pay 1.5x or whatever the statistics justify for low mileage drivers.

The same thing happened with cell phones. Limited competition and difficulty of portability made companies structure plans to encourage people to buy higher-minute plans for no reason. However, competition finally gave us reasonable prepaid plans, so I pay <$10/mo instead of $30+/mo for the minimum plan. Now low volume callers don't have to subsidize high volume callers.


RE: California is stupid
By JediJeb on 11/10/2009 3:24:18 PM , Rating: 2
quote:
The only reason costs will rise is that insurance companies will stop being able to milk low-risk drivers to subsidize the higher-risk ones. Instead of me paying 2.5x the insurance per mile, I'll only pay 1.5x or whatever the statistics justify for low mileage drivers.


But why are people who drive more necessarily higher risk? Yes more miles driven means more time on the road in which you can have an accicent, but it also means that person has more driving experience. Over the road truck drivers can drive over 100k miles per year, yet as a whole they have fewer accidents probably than drivers that only travel short distances to work and back. Also where you drive makes more of an impact on your likelyhood of having an accident than how far you drive. Driving 15 miles to work on a congested multilane freeway would be more apt to cause accidents versus 50 miles on open two lane roads in the middle of nowhere. I think there are several flaws in just basing cost on a per mile basis.


RE: California is stupid
By Mint on 11/10/2009 4:15:46 PM , Rating: 2
Nothing is "necessarily" so in insurance. On average, though, people with higher mileage have more claims and casualties. It's not perfectly linear as low mileage drivers do have a higher per-mile claims rate, but the relationship is significantly stronger than the current "low mileage discount" reflects.

Here's some stats I linked to in another post (starting on page 8):
http://www.ceres.org/Document.Doc?id=432


RE: California is stupid
By Kenenniah on 11/11/2009 2:04:00 PM , Rating: 2
I don't think anyone is suggesting they use miles driven only. Your driving history, the area you drive in, and the type of expected use of the vehicle are still considered in your rates.


RE: California is stupid
By ussfletcher on 11/10/2009 11:32:33 AM , Rating: 2
It is pretty sickening what can happen when you have bleeding heart liberals just aching to hand out money to poor people. I propose that they only tax the people that vote for the entitlement programs, maybe that will get people to think twice about it.

California, from what I have seen IS another country, for all intents and purposes. I have been here for about 3 months now, and let me tell you it is nothing like the mid-west. The culture is just totally different than anywhere else I've been. Its odd because it took me a couple months to adjust whereas I've lived in other places around the country and fit right in.. though I imagine the New York area would be hard to adjust to as well.


RE: California is stupid
By Donkey2008 on 11/10/09, Rating: -1
RE: California is stupid
By d3872 on 11/10/2009 12:22:45 PM , Rating: 4
quote:
...For us Californians, a lot us go to school...


I couldn't have said it better myself.

Sincerely,

Wife beating redneck (i.e. anyone who wasn't born in California, apparently)


RE: California is stupid
By Spuke on 11/10/2009 12:58:26 PM , Rating: 3
As a transplant from other states, I can attest that California does have its own mini-culture but it seems that culture is more readily apparent in the cities. The rural areas of CA are more like the other southwestern states. CA isn't the only state with its own mini-culture, the US is made up of various sub-cultures. It's just how we are. No one is better than the other although we have our own preferences. I live in CA and LOVE the geographical diversity. How many places can you go to the beach and swim and go to the mountains and ski in the same day?

I don't like CA's government at all and am willing to give up what I do like to get a better government. It just seems their sole purpose in life is to f$%k its own residents. We're constantly having to fight these guys. It's ridiculous. There's a lot of people willing to stay and fight but I'm tired of it. Moving to AZ the second I get the opportunity.


RE: California is stupid
By Spuke on 11/10/2009 12:48:28 PM , Rating: 2
quote:
No wonder middle-America is such an economic failure (and ironically why Fox News is such a success)
And California is an economic success? LOL!


RE: California is stupid
By Donkey2008 on 11/10/2009 4:48:46 PM , Rating: 2
I'm sure the people at Northrup Gruman, Intel, Chevron, Dreamworks, Levi Strauss, VISA, Amgen, Apple, Taco Bell, CB Richard Ellis, Unocal, THQ, Disney, HP, Callaway, Nvidia, Jack in the Box, Google, etc...etc...etc...etc...etc...etc would disagree with that assessment.


RE: California is stupid
By mdogs444 on 11/11/2009 8:30:06 AM , Rating: 2
Perhaps you should reanalyze the situation that we're talking about here.

No one is saying that there are not good, well established companies in California who can make a profit. We're saying its the far left government of California (and now the US) who wants to penalize and tax to hell any company that makes a profit - then they complain about job cuts, layoffs, companies moving overseas, offshore tax havens, price increases, and companies holding out their hands for bailouts.

Its not the companies who are at fault - its the ever punishing government who changes the rules by the day and causes companies to not be able to function at margins they deem as profitable and forward looking for their own business plans.


RE: California is stupid
By n00bxqb on 11/10/2009 12:14:49 PM , Rating: 2
Baffling ?

I can't think of many other countries that have a population density as low as Canada. Combine that with public health care and other socialist policies and you have a recipe for debt.

That being said, Canada has been chipping away at its debts over the last couple of decades and is in much better shape than the US when it comes to national debt.


RE: California is stupid
By Mint on 11/10/2009 12:26:14 PM , Rating: 2
It was chipping away until the conservative gov't came in and cut taxes, justifying it with BS claims of goverment wastage that they would eliminate. Canada is in the best position regarding debt in the entire G8, because for a decade we actually payed the taxes necessary to fund our spending unlike other countries (including the "non-socialist" US).

Now total debt is estimated to rise 35% by 2014. $55B this year alone.


RE: California is stupid
By Hoser McMoose on 11/11/2009 12:21:21 AM , Rating: 2
quote:
It was chipping away until the conservative gov't came in and cut taxes

It wasn't the tax cuts that did us in, it was the MASSIVE increase in government spending and bloat that the "Conservative" (in name only) brought in with them.

Since taking power in 2006 the Conservatives in Canada have been spending like drunken sailors, increasing government spending at an average of 7% per year BEFORE the recession hit. This year they're jacking up government bloat by something like 12%. This makes him the second most socialist/big government Prime Minister Canada has ever had after Trudeau.

In Canada we've developed this odd situation where the Liberals campaign on the left and govern on the right while the Conservatives campaign on the right and govern on the left.

... and now back to our regularly scheduled on-topic messages :D


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