Smart Auto Insurance Blog

Auto insurance companies have been using gender as a pricing mechanism for many years when determining auto insurance quotes.  Women typically get lower auto insurance quotes because they are less likely to be in an accident, but despite this fact, many view this type of risk-based pricing as discrimination.

Things are looking to change in Europe when it comes to using gender in pricing.  According to the article “EU Court Bans Gender Basis for Insurance Cost” on DW-World by Andrew Bowen, the European Union’s highest court banned using gender as a factor when determining price.  The European Court of Justice ordered insurance companies to adopt a way of calculating rates without useing gender by December 21st of 2012.

This could have a negative effect on consumers over time.  EU law already banned using gender but the insurance industry had an exemption as long as the insurers regularly published statistical information on which their rates were based.  CEA, Europe’s insurance industry lobby, is against the decision and say the impact on price, benefits and consumer options could be huge.  Is this a trend that will make its way to the United States?  Only time will tell, but if it does it’s fair to say it will have a big impact on the way auto insurance rates are calculated and many will end up paying more for their policy.

Many consumers associate the term “non-standard” auto insurance with high risk, but this isn’t always the case.  According to the Founders Auto Insurance website the terms are often synonymous.  They do point out however that “non-standard” simply means not adhering or conforming to the standard policy.

Many of Founder’s forms, classes, and territories do actually conform to auto insurance industry standards, but some aspects do not making part of it “non-standard”.  Most non-standard auto insurance companies start off with a standard methodology, and make appropriate modifications to suit their customer’s needs which are always changing.  They take into consideration the economy, the market demand, and consumer needs and tailor the policies to fit the times.

Founders Insurance offers vehicle surcharging, modified territories, and they create classes based on what is going on in the market.  There is a unique risk selection criteria, but a very high percent of new business at Founders has been previously insured with a clean driving record.  Founders also follow similar models for their homeowners insurance and commercial liability & property policy options.

On February 23rd, the OneBeacon Insurance Group Board of Directors announced their first quarter results.  Based on their website information, they declared a $0.21 per share quarterly dividend, paid in cash on March 31st to shareholders of record Common Shares for the close of the business day on March 17th.

OneBeacon Insurance Group is a holding company and they offer a wide range of specialty insurance products sold through independent agencies as well as regional & national brokers, wholesalers, and managing general agencies.  They deal with products such as One Beacon auto insurance, OneBeacon Specialty Property, and services to assigned risk markets.

OneBeacon’s insurance businesses are available throughout the United States and offer competitive prices and unique programs for a variety of customers.  They also offer producers, brokers, and insureds the useful ability to report claims online.  With online expansion and continued success, shareholders should hope to see continued growth and return.

For many years, auto insurance companies have been using a consumer’s credit score to help determine risk and calculate auto insurance quotes.  It has been debated by industry experts and consumer advocates whether or not this is fair and whether or not it makes sense.  Most auto insurance companies agree that this is an accurate way to determine risk, and study after study shows that riskier drivers tend to have lower credit ratings.

The National Association of Insurance Commissioners has been probing insurers continuously about their credit score use and the auto insurers are defending themselves.  This is according to the article “Auto Insurance Companies Defend Use of Credit Scores” found on Insurance NewsNet.com.  With a struggling economy, the issue is even more hot.  People with once excellent credit scores are finding themselves out of work and paying late on bills which is affecting their credit.  Double whammy once they receive an auto insurance quote and see their rates have increased due to the drop in their credit score.

The use of credit scores is supported by most states, which use a model from the National Conference of Insurance Legislators.  Louisiana commissioner of insurance, Jim Donelon, says he doesn’t see anything wrong with the practice and he attended a public hearing with the NAIC’s Property and Casualty Insurance Committee where auto insurance companies defended their use of credit scores when determining auto insurance rates for customers.

In today’s economic environment people everywhere are trying to save money where they can.  Once it’s time for a new car, many consumer are turning towards used cars as their purchase of choice.  Not only is this because used cars are generally less expensive but auto insurance on used cars is often cheaper as well.  If you compare auto insurance on a used car verses a new car you will find the quotes to be cheaper on the used cars in most instances.  This is because the used cars are on average less expensive to repair and replace.

The government offers a convenient outlet for buyers to search for used cars through auto auctions.  The General Services Administration (GSA) is helping consumers better understand the benefits of using auctions and work hard to make the process smooth.  It can be easy to find a very good deal on a used car through an auction, but it’s important to go through a reputable service to ensure you are getting your money’s worth.

The GSA offers a comprehensive website to prospective buyers that is very user-friendly.  GSA holds public auctions throughout the US at registered auction sites.  By registering at their website you can receive more information on auctions in your area and be well on your way to a quality used car at a competitive price.

According to the press release “Legislators Take Aim at Ohio Auto Insurance Verification Program” found on OnlinePRNews.com, Ohio state representative Matt Huffman re-introduced a bill that would stop an auto insurance verification program given by the state of Ohio.

The Random Selection program has sent out letters to car owners who are asked to mail in proof of auto insurance to the Bureau of Motor Vehicles since 1998.  The point of the program was to cut down on the number of uninsured drivers on the road.  If the person did not respond within 90 days their license was suspended and they had to pay a fine.  Based on a report from the Columbus Dispatch, approximately 5400 letters were sent out weekly and about 500 of those did not carry auto insurance.

The Insurance Research Council says that about 16% of Ohio drivers were uninsured in 2007 and that number is believed to have risen since unemployment has risen steadily throughout the state.  This may mean that the verification program is not effective in which case the BMV could save a lot of time and money by cutting back on the program.  Rep Huffman advised a panel that there were some unfair instances related to the mailings and this type of problem could be resolved fixing or eliminating the program.

Surprisingly, over half of respondents to a recent survey from LexisNexis Risk Solutions, believe that auto insurance rates should be driven by actual driving data obtained through ob-board devices monitoring how someone drives.  According to the article “Survey Shows Mixed Views of Data-Driven Auto Insurance Rates” by Ben Zitney on onlineautoinsurance.com, privacy concerns are holding back consumers from accepting auto insurance companies’ desire to collect information directly from the vehicle to set rates.

The monitoring device placed in the car can detect a variety of information such as speed, mileage, and braking data.  Most auto insurance companies already use personal information like ticket history and credit history when determining rates, but this might take the privacy issue over the edge.  The use of these devices is getting more and more common and could eventually be the norm.

GMAC has been collecting data from OnStar devices for some time now and having great success with their information gathered.  Since 2008 Progressive has been offering discounts to policyholders who agree to have the devices placed in their car for monitoring.  They measure information such as speed, braking, times of day driven, and distance traveled.  Allstate announced that they have launched a similar program called Drive Wise to use data when calculating auto insurance policies.  Compare auto insurance options to see if this might be something that could save you money in the long run.  If you’re a good driver but haven’t proven through your driving record, this could be a plan for you.

The Freeman Auto Report found that new car sales in the greater Austin area increased 10% in 2010 compared to 2009.  This is still far off pace from new car sales in 2007, when over 100,000 new cars were sold in Austin according to the article “Texas New Car Sales Increase in 2010″ on USInsuranceonline.com.

General Manager of Jaguar Land Rover Austin said in an interview with the Austin American-Statesman that this is a good sign and that 2011 will be a good year for everyone.  The economy is slowly picking up and this is definitely affecting new car sales as well as car insurance quotes in Texas.

The Texas Department of Insurance says the market has recently added 9 new providers which could make prices more competitive for Texas auto insurance rates.  This is just in time since minimum liability rates just increased causing overall premiums to increase.  With more providers in the market, hopefully they will compete for consumer business making rates stay flat or even decrease.

Texas is not the only state to feel the economy creep back through car sales and car insurance policies.  At this point there may be a light at the end of the tunnel for the economic slump that’s been keeping us down for the past few years.

Last month a presentation given last month by industry expert, Steven Weisbart, shows that the price of auto insurance has been rising steadily over the past three years.  The article “Report: Car Insurance Price Trends Are Out of Sync With Economy” by Ben Zitney on OnlineAutoInsurance.com discusses the various trends of auto insurance quotes over time.

Steven Weisbart is the Insurance Information Institute’s Senior Vice President and chief economist and he believes the auto insurance market hardened at the end of 2007 after a 4 year period of dropping auto insurance rates.  The national average expenditure on coverage has risen steadily over the past three years.  The report shows an overall increase of about 12% from 2007 to 2010 causing concern for many struggling Americans.

Weisbart’s presentation is entitled “Mega-Trends Influencing the Future of Auto Insurance” was was addressed in October at the National Auto Insurance ExecuSummit held in Connecticut.  It highlighted many emerging trends in the auto insurance industry and helped explain some of the upsetting increases in auto insurance rates that are caused partially by the economy’s various downward trends.

It’s no surprise that using your phone while driving can cause accidents since your attention is taken away from the road.  But smartphones have added a new danger to the mix.  Smartphones are addicting and many Americans admit to using their phones to check email, update social sites, and read text messages despite this being against the law.

According to the article “Use Smartphones Smartly Can Help Avoid Car Accidents” by Richard Burton on AutoQuoteNow.com, 72% of people who use their phone while driving say work is what tempts them to break the law.  About 33% are drawn to social sites such as Facebook and Twitter while driving.

Fatal accidents have increased dramatically from drivers using their phones, despite laws being passed to ban such usage.  These handheld computers are a major distraction for many drivers and it takes self-discipline to wait until the drive is over to check the phone.  The good news is that awareness is on the rise and hopefully education will ultimately help to deter using smartphones while driving.