PCI Urges NAIC to Safeguard Competition for Auto Insurance to Protect Consumers

CHICAGO - The Property Casualty Insurers Association of America (PCI) is urging the National Association of Insurance Commissioners’ (NAIC) Auto Insurance Study Group which is examining pricing of auto insurance to avoid breaking what isn’t broken while encouraging improvement and innovation. PCI and our members believe it’s important to ensure that the auto insurance market continues to remain competitive in order to protect consumers.   

“Ensuring an environment of robust competition is the best means of addressing availability and affordability issues as it results in lower costs and provides all consumers with a broader array of products and services,” said Dave Synder, PCI’s vice president international policy, policy development and research. “A sound marketplace allows insurers to eliminate inefficiencies and stimulates their efforts to attract and retain customers and offer innovative products that provide greater value to consumers.”

Consumers benefit from risk classification factors that distinguish lower-risk policyholders from higher-risk policyholders.  “The rating variables used improve the relationship between insurance pricing and insurance risk so that individuals and society as a whole can make good tradeoffs between risk acceptance, risk avoidance, and risk mitigation. The more risk assessment tools available to insurers, the more accurately risks can be priced,” added Synder.

Data shows that within the last year-and-a-half, we have observed an unexpected acceleration in the increase in frequency and severity of personal auto claims driving up costs.  This is especially alarming with respect to the claim frequency trend that had been declining in previous decades.

“Regulators should work more with the industry and interested parties, such as safety advocates, to help reduce those costs. We believe these accidents can be preventable, for example through stronger highway safety laws and enforcement, better car designs, changes in compensation law and a much stronger and greater long term commitment and support to improve and maintain relevant infrastructure,” said Synder.   

PCI agrees that the industry and regulators need collectively to respond to new technology driven demands or risk becoming irrelevant. This is an approach that will unite rather than divide us and ultimately provide the maximum benefit to the public that we all serve.    

“We look forward to supporting the continued strength of financial protection that is expected by insurers' policyholders and stakeholders. Additionally, we think greater returns for all consumers are possible through cooperative work to reduce the cost drivers that have the greatest impact on auto insurance prices,” said Synder.   

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PCI promotes and protects the viability of a competitive private insurance market for the benefit of consumers and insurers. PCI is composed of nearly 1,000 member companies, representing the broadest cross section of insurers of any national trade association. PCI members write more than $183 billion in annual premium, 35 percent of the nation's property casualty insurance. Member companies write 42 percent of the U.S. automobile insurance market, 27 percent of the homeowners market, 32 percent of the commercial property and liability market and 34 percent of the private workers compensation market.

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Consumers benefit from risk classification factors that distinguish lower-risk policyholders from higher-risk policyholders
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The more risk assessment tools available to insurers, the more accurately risks can be priced
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Ensuring an environment of robust competition is the best means of addressing availability and affordability issues as it results in lower costs and provides all consumers with a broader array of products and services
Dave Synder