Presentation of Douglas Heller to NCOIL P&C Insurance Committee - - PowerPoint PPT Presentation

Presentation of Douglas Heller to NCOIL P&C Insurance Committee July 12, 2019

www.ConsumerFed.org

Auto Insurance Expenditure Change by Regulatory Rating System (1989-2015)

Source: Consumer Federation of America, February 11, 2019. Auto Insurance Regulation: What Works

• 2019. https://consumerfed.org/wp-content/uploads/2019/02/auto-insurance-regulation-what-works-2019.pdf

106% 92% 83% 82% 70% 45%

25% 35% 45% 55% 65% 75% 85% 95% 105% 115%

Deregulation Flex Rating Limited Flex File and Use Use and File Prior Approval

Percentage Increase of Auto Insurance Expenditures by State (1989-2015)

Key Elements of California Insurance Rate Reform Law and Regulations (Proposition 103)

• Prior approval of rates, rules, and forms
• Strong and standardized rules for determining and enforcing prohibition
• n excessive, inadequate, or unfairly discriminatory rates
• Strong transparency standards: All information provided to the

commissioner pursuant to this article shall be available for public inspection

• Strong consumer participation standards: Any person may initiate or

intervene in any proceeding permitted or established pursuant to this chapter, challenge any action of the commissioner under this article, and enforce any provision of this article.

• Prioritization of driving-related factors in premium setting and

prohibition on use of credit-related and several other non-driving rating factors.

Customer premiums are often tied to personal characteristics & socio-economic factors that have nothing to do with driving safety Sample Motorist

• 35 year old
• Licensed since age 16
• 2009 Pontiac G6, which is

paid off

• 10 mile daily round trip

commute

• Perfect driving record –

no tickets or accidents

Sample Motorist

• 35 year old
• Licensed since age 16
• 2009 Pontiac G6, which is

paid off

• 10 mile daily round trip

commute

• Perfect driving record – no

tickets or accidents

$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

$810

Male Lawyer with Graduate Degree, Owns Home, is Currently Insured, and Pays In Full

$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

Sample Motorist

• 35 year old
• Licensed since age 16
• 2009 Pontiac G6, which is

paid off

• 10 mile daily round trip

commute

• Perfect driving record – no

tickets or accidents

Male Female Lawyer with Graduate Degree, Owns Home, is Currently Insured, and Pays In Full

$972

$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

Sample Motorist

• 35 year old
• Licensed since age 16
• 2009 Pontiac G6, which is

paid off

• 10 mile daily round trip

commute

• Perfect driving record – no

tickets or accidents

Male Female Lawyer Factory Worker with Graduate Degree, Owns Home, is Currently Insured, and Pays In Full

$1014

$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

Sample Motorist

• 35 year old Licensed since

age 16

• 2009 Pontiac G6, which is

paid off

• 10 mile daily round trip

commute

• Perfect driving record – no

tickets or accidents

Male Female Lawyer Factory Worker with Graduate Degree High School Diploma, Owns Home, is Currently Insured, and Pays In Full

$1082

$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

Sample Motorist

• 35 year old
• Licensed since age 16
• 2009 Pontiac G6, which is

paid off

• 10 mile daily round trip

commute

• Perfect driving record – no

tickets or accidents

Male Female Lawyer Factory Worker with Graduate Degree High School Diploma, Owns Rents Home, is Currently Insured, and Pays In Full

$1114

$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

Sample Motorist

• 35 year old
• Licensed since age 16
• 2009 Pontiac G6, which is

paid off

• 10 mile daily round trip

commute

• Perfect driving record – no

tickets or accidents

Male Female Lawyer Factory Worker Unemployed with Graduate Degree High School Diploma, Owns Rents Home, is Currently Insured, and Pays In Full

$1188

$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

Sample Motorist

• 35 year old
• Licensed since age 16
• 2009 Pontiac G6, which is

paid off

• 10 mile daily round trip

commute

• Perfect driving record – no

tickets or accidents

Male Female LawyerFactory W

• rker

Unemployed with Graduate Degree High School Diploma, Owns Rents Home, is Currently Insured, and Pays In Full Installments

$1394

$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

Sample Motorist

• 35 year old
• Licensed since age 16
• 2009 Pontiac G6, which is

paid off

• 10 mile daily round trip

commute

• Perfect driving record – no

tickets or accidents

Male Female LawyerFactory W

• rker

Unemployed with Graduate Degree High School Diploma, Owns Rents Home, is Currently Insured Uninsured, and Pays In Full Installments

$1712

Good Driver $810

$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

Sample Motorist

• 35 year old
• Licensed since age 16
• 2009 Pontiac G6, which is

paid off

• 10 mile daily round trip

commute

• Perfect driving record – no

tickets or accidents

Good Driver $1712

Preferred Demographic

Bad Driver $1110

$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

Sample Motorist

• 35 year old Licensed since

age 16

• 2009 Pontiac G6, which is

paid off

• 10 mile daily round trip

commute

• Accident & Moving

Violation in Past Year

Good Driver $1712

Preferred Demographic

California’s Low Cost Automobile Insurance Program for Lower-Income, Good Drivers

Thank you

Douglas Heller DouglasHeller@Ymail.com

Key Takeaway Unfair premiums drive safe motorists out of the market.

That means:

• A smaller number of drivers make up the insurance pool responsible for

funding accidents

• The insurance pool has a higher concentration of bad drivers and not

enough good drivers By eliminating unfair discrimination that keeps good drivers out of the market, the market will:

• Spread the risk better
• Bring in more total premium
• Reduce the number of uninsured motorists
• Lower individuals premiums
• Incentivize Safe Driving

The Widow Penalty (LA)

COMPANY PENALTY Progressive Up to 15% Go Auto 9% Allstate 6% Geico Up to 4%

+204 +206

The Widow Penalty (MI)

Customer premiums are often tied to personal characteristics & socio-economic factors that have nothing to do with driving safety Sample Motorist

• 35 year old living in Baton

Rouge (70802)

• Licensed since age 16
• 2013 Ford Fusion, which is

paid off

• 10 mile daily round trip

commute

• Buys basic limits (15/30)

policy

• Perfect driving record –

no tickets or accidents

Male Investment Banker with Graduate Degree, Previously Purchased 100/300 Policy

• Perfect driving record –

no tickets or accidents

$400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

$721

$400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

Male Female Investment Banker with Graduate Degree, Previously Purchased 100/300 Policy

• Perfect driving record –

no tickets or accidents

$847 +$126

$400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

Male Female Investment Banker Bank T eller with Graduate Degree, Previously Purchased 100/300 Policy

• Perfect driving record –

no tickets or accidents

$887 +$166

$400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

Male Female Investment Banker Bank T eller with Graduate Degree High School Diploma, Previously Purchased 100/300 Policy

• Perfect driving record –

no tickets or accidents

$1,022 +$301

$400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

Male Female Investment Banker Bank T eller who is Unemployed with Graduate Degree High School Diploma, Previously Purchased 100/300 Policy

• Perfect driving record –

no tickets or accidents

$1,178 +$457

$400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

$1,631 +$911

Male Female Investment Banker Bank T eller who is Unemployed with Graduate Degree High School Diploma, Previously Purchased 100/300 Basic 15/30 Policy

• Perfect driving record –

no tickets or accidents

$400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

Male Female Investment Banker Bank T eller who is Unemployed with Graduate Degree High School Diploma, Previously Purchased 100/300 Basic 15/30 Policy No Coverage for 3 Months (did not need)

• Perfect driving record –

no tickets or accidents

$2,327 +$1,606

$400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

• Perfect driving record –

no tickets or accidents

$721 Good Driver Good Driver Preferred Demographic $2,327

$400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

• Accident & Speeding

Conviction

Preferred Demographic $2,327 $1,847 Bad Driver Good Driver

2016 Auto Buyers Discount Chart

Company Air Bags Anti Lock Brakes Anti Theft Multi Vehicle Multi Policy Credit Based Insurance Score Student Away at School Good Student Claim

• r Ticket

Free Pacific Indemnity Ins. 20% 5% 5 or 15% 10%

6% 7%

Pharmacists Mutual Ins. 20-30% 5% 5-15% 20% 15-25% 0-66% 30% Pioneer State 5% 5% 5-20% 10% 20-56% 25% 12% 5-10% Progressive Marathon 10% 5% 3-22% 7% 0-74% 1-10% 10% 0-16% Progressive Michigan 10% 5% 6-35% 8% 0-74% 1-10% 10% 0-21% Safeco Ins of Illinois 3% 12-36% 5-14% 0-73% 8-20% 0-16% 5% SECURA Insurance 10% 12% 5% 0-60% 17% 0-20% 5% SECURA Supreme 10% 12% 5% 0-60% 17% 0-20% 5% Standard Fire Insurance Co 30% 5-20% 5 or 25% 10% 20% State Auto Mutual Ins 20-30% 5% 5-25% 15% 10-15% 5-77% 10% 3-12% State Farm Fire & Casualty Co. 0-15% 0-20% 5-10% 4-30% 0-86% 0-61% State Farm Mutual Automobile 0-15% 0-20% 5-10% 4-30% 5-22% 0-86% 0-61% 0-19% 10-25% Titan Indemnity 0-18% 0-31% 0-70% 2-20% 5-20% Titan Insurance 5% 20% The Travelers Indemnity 30% 5-20% 5 or 25% 10% 20% Trumbull Insurance 10, 20% 5, 15% 0-35% 3, 5% 0-20% 23% 4-10% United Services Auto Assn 10-15% 15-20% 2-13% 2.8 13.2 2.8-57.4 2-25% 1-10% 17% USAA Casualty Indemnity 10-15% 15-20 2-13% 3.5-15.4 3.5-66% 2-25% 1-10% 17% Vigilant Insurance Co 20% 5% 5 or 15% 10% 6% 7% Westfield Ins. 20-30% 5% 5-15% 0-20% 5-20% 10-25% 7% Wolverine Mutual 5-15% 5% 10-25% 20% 5-55% 8% 5-10%

Source: Michigan DIFS. Your Guide to Automobile Insurance

0-86% 5-22% 0-86% 0-31% 0-70%

Best Credit Score (86% Discount) $1,000 Good Driver Annual Premium Worst Credit Score (0% Discount) $7,143 Good Driver Annual Premium Moderate Credit Score (43% Discount) $4,071 Good Driver Annual Premium

IS IT REALLY A DISCOUNT?