Smart Auto Insurance Blog

A report from Terrence Stutz in The Dallas Morning News states that some legislators have proposed a change to Texas auto insurance law that could result in significant savings on auto insurance rates. Two congressional Democrats, Representative Rafael Anchia and Senator Leticia van de Putte, have introduced bills that would make the following reforms:

• Auto insurance companies would no longer be able to increase rates immediately after they inform the Texas Department of Insurance. Instead, the state’s approval would be required before any rate increase.
• The state Insurance Commissioner would be elected to the public, making him or her more accountable to Texas drivers
• Insurers would be banned from using drivers’ credit ratings to determine premiums
• Policy forms would be standardized across all insurers in the state, making it easier to compare them

Terrence says that the fate of these measures is unknown at the moment.

In the Detroit Free Press, Kathleen Gray reports that 12 Michigan auto insurance companies have agreed to freeze their rates for a year. However, 96 other insurers have not agreed to the rate freeze as of the March 1st deadline. Governor Jennifer Granholm requested that insurers freeze their auto insurance premiums for a year while the state legislature works on auto insurance reform. 

The insurance companies that have agreed to freeze their auto insurance rates are:

• American Bankers’ Insurance Company of Florida
• American International South Insurance Company
• American Reliable Insurance
• Wolverine Mutual Insurance Company
• Pharmacists Mutual Insurance Company
• Great Lakes Casualty Insurance Company
• Electric Insurance Company
• Essentia Insurance Company
• Meritplan Insurance Company
• IDS Property Casualty Insurance Company
• Liberty Mutual Property Insurance Company
• Merchants Mutual Insurance Company

According to the Insurance Journal, Mich. Governor Jennifer Granholm is asking for a year-long freeze in auto insurance rates. Michigan auto insurance is some of the most expensive in the country, and state legislators want the time to figure out reforms.

The Office of Financial and Insurance Regulation will have the ability to penalize any auto insurance companies that refuse to refrain from increasing premiums during the next 12 months, the Democrat says.

Michigan residents have been hard hit by this recession, especially those in the Detroit auto industry. This request will offer them a measure of relief.

Auto insurance companies warn that a new bill in the Colorado state legislature could increase rates for motorists, claims Bob Mook of the Denver Business Journal. In 2003, the state switched to a tort system (where insurers pay a percentage of costs based on whose fault the accident was, going to court to settle disputes), but the Colorado No-Fault Motor Vehicle Insurance Act would reverse that change.

Governor Bill Ritter says that the tort system saves drivers about $322 per year on average, a 35% decrease from auto insurance rates under the no-fault system. A representative of the Rocky Mountain Insurance Information Association claims that Colorado auto insurance premiums have dropped from being the ninth-highest in the nation to 23rd-highest since the reform. According to Bob, insurance companies believe that no-fault insurance, where each insurer pays all expenses for their driver without assigning blame, is easily defrauded.

A change in state regulations may be resulting in higher auto insurance rates for people in New Jersey based on their education or occupation, states Larry Higgs of the Ashbury Park Press. Since January 1, New Jersey auto insurance companies are formally allowed to use factors other than an individual’s driving record in determining premiums.

According to a study of quotes, having a high school education as opposed to a college degree resulted in quotes up to 61% more expensive. Opponents of the new regulations contend that they will lead to an unregulated free-for-all: insurers will be able to reject individuals without explanation, and those individuals might choose to illegally drive without insurance. Larry says that some groups also consider this rule discriminatory against blue-collar workers and those with lower incomes, whom are least likely to afford higher auto insurance premiums.

Bills that would eliminate the usage of factors like a person’s job, education, and credit rating in calculating quotes for a policy have been introduced in both the state Senate and Assembly, but the former has remained stuck in committee for several years.