Consumer Reports Provides Incomplete Picture of Auto Insurance

CHICAGO, IL – The following statement by the Property Casualty Insurers Association of America (PCI) is in response to “Consumer Reports” recent study on car insurance rates. The following statement can be attributed to David Snyder, PCI’s vice president of policy development and research.

“The auto insurance industry serves the driving public well by providing a highly competitive and pro-consumer marketplace that gives consumers many options to choose from. As a result, if you don’t like your quote or the cost of your insurance, you can always shop around for a better price and we encourage consumers to do so.

“One of the benefits of shopping around is that if consumers have questions or concerns about how their price was determined, their agent or company can walk them through the process and discuss ways to adjust the price and coverage offerings.

“It’s also important for consumers to understand that what Consumer Reports calls “socioeconomic factors” are not that at all, but rather different ways to predict the likelihood of someone having an accident or filing a claim other than just relying on state motor vehicle records which are plagued by many omissions and unreported events. For example, just think about that person that sped by you on the freeway but didn’t get pulled over, or that ticket that doesn’t go on your record because you completed an “online safe driving” course. It’s also important to note that insurance scores are a strong predictor of the likelihood of someone having an accident or filing a claim and insurers’ real-world data as well as numerous studies have repeatedly proven that. These studies also show that the vast majority of consumers benefit from the use of this kind of factor, that’s why nearly all regulators allow it in their states.

“Unlike many other prices consumer pay for goods and services, auto insurance prices are heavily regulated by each state. There are laws governing insurers’ use of each underwriting and rating factor, especially credit, in determining insurance prices. Almost every state regulates to ensure that rates are not excessive, inadequate or unfairly discriminatory to protect the consumer.

“Usage-based insurance is used to provide more precise information about the way people drive. It is now allowing the collection and use for pricing of actual vehicle usage data and insurers are increasingly using it. This is something that benefits consumers because prices will help measure the risk of loss. PCI would like to see Consumer Reports endorse some of the great things insurers are doing to help consumers instead of simply criticizing the industry.

“It’s seem odd that Consumer Reports is criticizing one of the most pro-consumer and competitive markets – which provides dozens of choices for all drivers. Do they want to remake this market so it resembles a non-competitive one-size fits all market, which we believe would hurt consumers?

“PCI welcomes the questions raised by Consumer Reports, and our highly competitive and regulated industry has nothing to hide.  We look forward to Consumer Reports reaching out to us in the future to avoid misconceptions of our industry and how we do business.” 

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