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Watchdog group says new rules give insurance companies all the power





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RE: Hogwash!!!...
By therealnickdanger on 11/10/2009 11:31:15 AM , Rating: 2
The simple truth is that crashes typically increase alongside accesses. The more driveways, alleys, and intersections you have along a stretch of road, you increase the chance for a crash that much more. Combined with the fact that areas with more accesses have greater populations, you also get more drivers, bicyclists, and pedestrians thrown into the mix.

The reason that most people don't crash more than 20 miles from their home (17% according to that link) is that very few people live further than that from a population center. We can toss statistics around all day, but I am sitting on approximately 30 years of Minnesota crash data that says that long-distance roadways (like Interstate highways) inherently have the lowest crash rates of any roadway system. The highest crash rates? Pick any street in downtown Minneapolis or St. Paul.

So if we had a law in Minnesota that taxed people per mile, claiming that the further they drive per day, the more "responsible" they are for crashes and the impending crash cost, we would in fact be punishing many drivers (commercial drivers specifically) that traverse many miles per day along this state's safest roadways? Leave it to the government to come up with something so bass-ackwards.


RE: Hogwash!!!...
By Mint on 11/10/2009 1:56:39 PM , Rating: 2
Look here:
http://www.vtpi.org/paydsum.pdf
http://www.ceres.org/Document.Doc?id=432 (especially pages 8-13)

Some quotes:

Higher-annual-mileage motorists tend to have lower per-mile crash rates, and lower annual-mileage motorists tend to have higher per-mile crash rates, but these factors can be reflected in premium structures.
Within a particular rating category there is a strong positive relationship between annual mileage and annual insurance claims.


Mileage is one of several factors that affect crash rates. Mileage cannot be used instead of other rating factors by charging all motorists the same per-mile fee or
funding insurance through fuel taxes, but accuracy improves significantly if annual mileage, incorporating additional rating factors, becomes the basis for premiums.


It's not linear, but the relationship is certainly a lot stronger than is reflected by insurance pricing. Imagine yearly premiums like $300 + $0.12 per mile instead of $1200 for the low mileage driver, $1500 for the average one, and $1800 for the high mileage. Then you will actually see the cost per mile that you are putting on the system.

Moreover, even though downtown Minnesota will have more crashes per mile than rural areas, it will also have fewer serious injuries or fatalities per mile. How all these factors are weighted is up to the insurance companies and their actuaries.


RE: Hogwash!!!...
By therealnickdanger on 11/10/2009 3:03:24 PM , Rating: 2
quote:
How all these factors are weighted is up to the insurance companies and their actuaries.

True. Which is why they can't be inherently trusted to do the right thing. I guarantee that they will definitely do the financially profitable thing.

quote:
Moreover, even though downtown Minnesota will have more crashes per mile than rural areas, it will also have fewer serious injuries or fatalities per mile.

False.

Urban Minnesota has many more serious injury and fatal crashes per mile than rural Minnesota. Even after you calculate in vehicle miles traveled (VMT), the overall crash rates and injury-specific severity rates are still higher in the urban centers.


RE: Hogwash!!!...
By Mint on 11/10/2009 4:29:45 PM , Rating: 2
They don't need to be trusted to do the right thing. They just need to offer PAYD insurance. If it's cheaper (as it is likely to be), then I along with others will switch over. Offering lower rates to low-risk drivers that are with other insurance companies does indeed bring them more profits, so this time the profitable thing is the right thing.

As for urban vs. rural, I just assumed that it was similar to the trends of the rest of nation, e.g. page 8 here:
http://www.ceres.org/Document.Doc?id=432
Maybe MN is a special case, but the negative y-intercept of that trendline tells you that urban areas have lower per-mile casualty rate than rural areas across the nation.

OTOH, I do know that Toronto has higher insurance rates than the rest of Ontario simply because there are more lawyers around to game the system :(


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