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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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RE: California is stupid
By mdogs444 on 11/10/2009 11:17:35 AM , Rating: 5
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.

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