Insurance Journal has been posting the testimony of Dr. Powell of UALR made before the House Financial Services Oversight & Investigation subcommittee last May. Within the discussion posted is the following observation, which merits highlighting:
We are not in this hearing because everyone likes insurance scoring. I have heard critics of insurance scoring describe potential or anecdotal unfair outcomes associated with its use. I do not dispute the fact that some consumers have encountered individual rating scenarios that seem to lack intuition. For example, I know of a consumer in Arkansas who received an increase in his premium because his wife cancelled a credit card they were not using. However, he called a few competing insurance companies and found one that offered him the same coverage at a significant discount from what he was paying before the change in his credit. This is an example of competitive markets reaching an optimal outcome.
I suppose this is the wrong week to note that argument could be applied in support of rate deregulation in general….
