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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: This is new?
By Mint on 11/10/2009 12:51:24 PM , Rating: 1
Then don't buy that insurance!

All I want is for someone to offer this service, not mandate it. Apparently legislation is needed for companies to offer it, so let's have it happen.

It absolutely baffles me that so many conservatives on DT are dismayed with this. Maybe they're high mileage drivers, but in that case they've been mooching off the system for years. They make all this hooplah about being against subsidies, but when the one that they've been benefitting is on track to disappear they bitch to no end.


RE: This is new?
By mdogs444 on 11/10/2009 1:07:26 PM , Rating: 3
I don't see anyone "mooching" or "benefiting" from any subsidies here.

The bottom line is that there are many insurance companies out there, so competition is alive and well. You choose who your carrier is. You choose to go with them based on the rate and services they offer. I don't see any conservatives setting the insurance premium rates for themselves, do you?

We are not against any forms of new ideas or methods for competition. What we are against is a new method being forced by legislation to encourage you to drive less. That is nothing short of social manipulation by legislation. If they want to offer this service as well as normal insurance methods - then go for it. But for the government to pass a law requiring me to put some kind of GPS device in my car to track my miles, where I go, etc .... and then charge my insurance based on it and potentially my gasoline taxes based on it...well then I have a big problem with it.


RE: This is new?
By Mint on 11/10/2009 2:25:33 PM , Rating: 1
Did you read this part of the article:

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 legislation is merely allowing PAYD insurance plans with mileage verification. What else am I supposed to think when people are against this? AFAICS they don't want to pay the true cost of their mileage. There is no forcing of anything here.

If many people don't want data tracking devices, then competition will provide insurance without mileage verification, just like prepaid per-minute cell plans haven't replaced monthly plans. If/when low mileage drivers with lower claims leave them, though, they will jack up rates to stay in business, but that's the free market in action.

Regarding subsidies, read this economically focused article that mostly steers clear of environmental aspects:
http://www.nytimes.com/2008/04/20/magazine/20wwln-...


RE: This is new?
By Spuke on 11/10/2009 1:29:32 PM , Rating: 2
quote:
Then don't buy that insurance!
Go back the read my entire post.

quote:
It absolutely baffles me that so many conservatives on DT are dismayed with this.
I'm absolutely baffled by the amount of people that can't friggin read! And who the hell said I was a conservative?


RE: This is new?
By Mint on 11/10/2009 1:58:55 PM , Rating: 2
I wasn't necessarily directing that at you.


RE: This is new?
By FITCamaro on 11/10/2009 5:23:17 PM , Rating: 2
What conservatives generally are against is the government mandating things. I know I sure as hell don't want a GPS tracking device on my car that the government has access to.

I think its fine for the government to allow certain plans to exist. But to mandate them for the purpose of making people drive less due to the inability to afford the higher insurance rates? No. I don't think it should matter how many miles people drive. I drove nearly 30,000 miles one year and didn't get in a single accident. Why? Because I'm a good driver and pay attention to whats going on around me. Sure that won't stop someone from smashing into me as I sit at a stoplight. But I don't think I should be punished for the actions of others. If I cause an accident, punish me. If I don't, leave me alone.


RE: This is new?
By aj28 on 11/10/2009 8:25:47 PM , Rating: 2
I think the point was that nothing has been mandated (yet), which makes all of the above bickering a little nonsensical and pointless. Neither the words "mandate" nor "require" exist anywhere in the article, and don't even appear until about twenty-or-so comments down... Let's all be friends when we can, yeah?

Opening up an opportunity for the free market to stretch its legs while simultaneously encouraging drivers to drive less thus helping preserve the environment and ease traffic congestion... It sounds pretty much like a win/win to me.


RE: This is new?
By Hoser McMoose on 11/11/2009 12:45:30 AM , Rating: 2
quote:
I know I sure as hell don't want a GPS tracking device on my car that the government has access to.

As a point of note GPS tracking is not necessary for this system. Progressive Insurance, as an example, merely takes mileage from your cars OBD-II port.

As far as the cost of insurance, as I'm sure you know it's ALL statistics and statistically speaking the more you drive the more likely you are to get into a collision. What's more, governments have put in place numerous other things that limit what statistics insurance companies can use. For example most states no longer allow insurance companies to use a drivers credit rating to determine insurance. It turns out that people who are financially responsible tend also to be more responsible drivers, but some felt that this discriminated against people with poor credit ratings. Other states have restricted setting insurance rates by a customers home address saying it discriminated against certain economic or even ethnic groups.

The end result? Insurance companies have to place more emphasis on what statistics they have left. You might not like it, but that's how the insurance industry operates.


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