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) Prior Approval 45% Use and File 70% File and Use 82% Limited Flex 83% Flex Rating 92% Deregulation 106% 25% 35% 45% 55% 65% 75% 85% 95% 105% 115% 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
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 on 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 Sample Motorist are often tied to personal • 35 year old • Licensed since age 16 characteristics & • 2009 Pontiac G6, which is socio-economic paid off • 10 mile daily round trip factors that have commute nothing to do with • Perfect driving record – driving safety no tickets or accidents
Male Lawyer with Graduate Degree, Owns Home, is Currently Insured, and Pays In Full Sample Motorist $810 • 35 year old • Licensed since age 16 • 2009 Pontiac G6, which is paid off • 10 mile daily round trip commute $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $- • Perfect driving record – no tickets or accidents
Male Female Lawyer with Graduate Degree, Owns Home, is Currently Insured, and Pays In Full Sample Motorist $972 • 35 year old • Licensed since age 16 • 2009 Pontiac G6, which is paid off • 10 mile daily round trip commute $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $- • Perfect driving record – no tickets or accidents
Male Female Lawyer Factory Worker with Graduate Degree, Owns Home, is Currently Insured, and Pays In Full Sample Motorist $1014 • 35 year old • Licensed since age 16 • 2009 Pontiac G6, which is paid off • 10 mile daily round trip commute $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $- • Perfect driving record – no tickets or accidents
Male Female Lawyer Factory Worker with Graduate Degree High School Diploma, Owns Home, is Currently Insured, and Sample Motorist Pays In Full $1082 • 35 year old Licensed since age 16 • 2009 Pontiac G6, which is paid off • 10 mile daily round trip commute $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $- • Perfect driving record – no tickets or accidents
Male Female Lawyer Factory Worker with Graduate Degree High School Diploma, Owns Rents Home, is Currently Insured, Sample Motorist and Pays In Full $1114 • 35 year old • Licensed since age 16 • 2009 Pontiac G6, which is paid off • 10 mile daily round trip commute $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $- • Perfect driving record – no tickets or accidents
Male Female Lawyer Factory Worker Unemployed with Graduate Degree High School Diploma, Owns Rents Home, is Sample Motorist Currently Insured, and Pays In Full $1188 • 35 year old • Licensed since age 16 • 2009 Pontiac G6, which is paid off • 10 mile daily round trip commute $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $- • Perfect driving record – no tickets or accidents
Male Female LawyerFactory W orker Unemployed with Graduate Degree High School Diploma, Owns Rents Home, is Sample Motorist Currently Insured, and Pays In Full Installments $1394 • 35 year old • Licensed since age 16 • 2009 Pontiac G6, which is paid off • 10 mile daily round trip commute $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $- • Perfect driving record – no tickets or accidents
Male Female LawyerFactory W orker Unemployed with Graduate Degree High School Diploma, Owns Rents Home, is Sample Motorist Currently Insured Uninsured, and Pays In Full Installments $1712 • 35 year old • Licensed since age 16 • 2009 Pontiac G6, which is paid off • 10 mile daily round trip commute $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $- • Perfect driving record – no tickets or accidents
Preferred Demographic Sample Motorist Good Driver $810 • 35 year old • Licensed since age 16 • 2009 Pontiac G6, which is Good Driver $1712 paid off • 10 mile daily round trip commute • Perfect driving record – no $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $- tickets or accidents
Preferred Demographic Sample Motorist Bad Driver $1110 • 35 year old Licensed since age 16 • 2009 Pontiac G6, which is Good Driver $1712 paid off • 10 mile daily round trip commute • Accident & Moving $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $- Violation in Past Year
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%
The Widow Penalty (MI) +204 +206
Sample Motorist Customer premiums • 35 year old living in Baton are often tied to Rouge (70802) personal • Licensed since age 16 characteristics & • 2013 Ford Fusion, which is paid off socio-economic • 10 mile daily round trip factors that have commute • Buys basic limits (15/30) nothing to do with policy driving safety • Perfect driving record – no tickets or accidents
Male Investment Banker with Graduate Degree, Previously Purchased 100/300 Policy $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 • Perfect driving record – $721 $600 no tickets or accidents $400
Male Female Investment Banker with Graduate Degree, Previously Purchased 100/300 Policy $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $847 $800 • Perfect driving record – +$126 $600 no tickets or accidents $400
Male Female Investment Banker Bank T eller with Graduate Degree, Previously Purchased 100/300 Policy $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $887 $800 • Perfect driving record – +$166 $600 no tickets or accidents $400
Male Female Investment Banker Bank T eller with Graduate Degree High School Diploma, Previously Purchased 100/300 Policy $2,000 $1,800 $1,600 $1,400 $1,200 $1,022 $1,000 $800 • Perfect driving record – +$301 $600 no tickets or accidents $400
Male Female Investment Banker Bank T eller who is Unemployed with Graduate Degree High School Diploma, Previously Purchased 100/300 Policy $2,000 $1,800 $1,600 $1,400 $1,200 $1,178 $1,000 $800 • Perfect driving record – +$457 $600 no tickets or accidents $400
Male Female Investment Banker Bank T eller who is Unemployed with Graduate Degree High School Diploma, Previously Purchased 100/300 Basic 15/30 Policy $2,000 $1,800 $1,600 $1,631 $1,400 $1,200 $1,000 $800 • Perfect driving record – +$911 $600 no tickets or accidents $400
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) $2,327 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 • Perfect driving record – +$1,606 $600 no tickets or accidents $400
Preferred Demographic $2,327 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $721 $800 • Perfect driving record – $600 no tickets or accidents $400 Good Good Driver Driver
Preferred Demographic $2,327 $2,000 $1,847 $1,800 $1,600 $1,400 $1,200 $1,000 $800 • Accident & Speeding $600 Conviction $400 Bad Good Driver Driver
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