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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 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?


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