It seems that some folks at the Globe are thinking about how auto insurance pricing could change as Massachusetts moves towards a little less regulation in pricing. From Friday’s paper:
Should drivers pay less for auto insurance simply because they maintain a checking account at a particular bank, graduated from law school, or work as surgeons?
Thousands of Massachusetts drivers receive these types of price breaks today, but it’s unclear whether the discounts will continue next year when companies for the first time in 30 years will be allowed to set their own rates subject to state approval.
Insurance Commissioner Nonnie S. Burnes, concerned about higher prices for drivers who are less affluent or less educated, has proposed rules for auto insurance competition that would bar companies from using such socioeconomic factors as income, education, occupation, and homeownership in deciding how much drivers should pay for coverage or whether to insure them. She has also proposed a one-year ban on the use of a driver’s credit history in setting rates, but not in deciding whom to insure.
It’s probably worth noting that group discounts do exist in the rest of the country, usually masked as a discount in an affinity program, but they are far less significant given the competitive marketplace reducing the effective value of those discounts. (”I could get an X% discount for being a member of group Y, but I already pay less than that because I get my coverage through insurer Z.”)
It’s funny that the pro-consumer entities that have been making a fuss to block credit-scoring and occupation-rating in deregulated auto insurance in Massachusetts haven’t been making a fuss over the group discounts now.
I suppose this could be explained by the mentality described in the following quote from the article:
With the current group discounts, members of the group pay less for auto insurance but nonmembers do not pay more[....]
Programs that provide only discounts seem to play better than programs where differences are expressed as both discounts and surcharges…even though the actual rates derived may be identical under both systems.
The lack of basic math understanding here is simply amazing.