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Print 102 comment(s) - last by Kenenniah.. on Nov 11 at 2:04 PM

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 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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