Insurers and industry groups are seeking to lower rates through the better use of available data.
According to the research conducted by consumer groups, the factors that are being used to calculate auto insurance are being used unfairly for that practice, as issues unrelated to driving risk are being given far too much weight.
These factors go far beyond the obvious points such as speeding tickets and car accidents.
The New York Public Interest Research Group and the Consumer Federation of America have both issued their own separate reports that have indicated that auto insurance companies are using factors such as occupation and educational level in order to calculate a driver’s rates, and that this practice is to the detriment of consumers. This is particularly true of individuals who are within the lower income brackets.
Others have stated that these auto insurance company practices are raising the costs among specific groups of drivers.
A former Texas insurance commissioner, J. Robert Hunter, who is now the Consumer Federation’s director for insurance has said that insurers are – to an increasing extent – using their pricing models in order to raise the premiums for those groups of people who have the lowest likelihood of switching their insurance companies, despite the fact that their monthly bills are continuing to rise.
However, insurers have stated that any of the factors that are used within the calculations that they use to determine premiums have received the approval of state officials, and that occupation and education level may seem as though they are unrelated to driving risk, but that they are actually “highly predictive” of the groups of people who are more or less likely to make claims. They said that these factors can even help to determine the severity of the claims that could be made.
For the first time, the federal government is now stepping into this debate. The Federal Insurance Office has now announced that it intends to monitor and study the level of affordability associated with auto insurance as it is calculated for consumers in the low and moderate income brackets, even as insurers continue with perfectly legal premiums calculations using allowable factors, to determine whether or not the result can be deemed fair.