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 Posted: Mon Sep 29, 2008 4:25 am Post subject: Insurance companies continue raising rates.. |
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I'm wondering about the auto insurance premium hikes each year!
Even when billions are less driven in terms of mileage...how could this happen?
How do these insurance companies develop their price structures?
Playmate-of-Texas
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Playmate-of-Texas
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| Posted: Mon Sep 29, 2008 4:59 am Post subject: |
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My auto insurance has not gone up.
Less miles driven does not always mean less risk/exposure (money paid out) |
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tcope
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| Posted: Mon Sep 29, 2008 5:10 am Post subject: |
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Hi tcope,
Its good to know that your rate has not gone up!
But would you please explain with a couple of examples? I'd really love to know how risks could remain the same when I'm driving less..
Playmate-of-Texas
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Playmate-of-Texas
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| Posted: Mon Sep 29, 2008 6:28 am Post subject: |
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Miles drive contribute to risk very little when compared to everything else. Other, large, things to consider are; driving record, location, age, marital status, cost of vehicle repairs.
The likelihood of someone being in an accident within 10 or 20 miles of their home is far greater then further distances. That is, your _just_ as likely to be in an accident close to your home. This is because the factors mentioned above don't care where you are at the time. |
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tcope
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| Posted: Mon Sep 29, 2008 7:00 am Post subject: |
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Hi, I second tcope, driving less doesn't imply lesser risks.
| Quote: | | But would you please explain with a couple of examples? I'd really love to know how risks could remain the same when I'm driving less.. |
If you are scheduled to drive during the peak hours of dense traffic, you are at more risk than a parson who is driving more during the time of the day when the traffic is less.
Also, if you take occasional long drives, when you are still driving lesser miles than a regular driver, you're exposing yourself at greater risk by driving for longer stretches.
IMO what matters is the driving record of the driver, mileage may be one of the components that affects the premium rate, but its definitely not the only one.
Regards,
Juanita |
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Juanita
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| Posted: Mon Sep 29, 2008 8:44 am Post subject: |
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Hi,
I don't think 'driving less' could be the only factor towards arriving at the rates. Each year there are considerable changes to a lot of other factors- expansion of the customer database, introduction of new and improved insurance plans, emergence of innovative carriers etc. All of such factors when taken into account would direct a carrier to redesign the price-structure. So, when you start thinking of one factor, make sure you take into account the others too! Crossbreed
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Crossbreed
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| Posted: Mon Sep 29, 2008 8:52 am Post subject: |
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Hey! Think of the oil companies...they are somehow carrying on with their high-pricing!
I'm sure everyone over here remembers the fall of the oil prices.
I guess the agro-based companies are close on their heels..
I guess with the gasoline price hikes in their records..the insurance carriers are no fools to feed on their profit-making tools any further!
Purpleheaded08
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Purpleheaded08
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| Posted: Mon Sep 29, 2008 10:02 am Post subject: |
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Hi..
See, after so much of it being said and thought..if the Americans continue to drive less because of the rising gas prices, then I'm sure lesser claims are gonna get forwarded. Then as I can see...the rates are gonna fall sooner or later. Well, I'd also believe that the governors have a role to play in order to decide whether it should come as profits for the carriers or it should reduce the premium rates for the consumers.
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roddick
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| Posted: Mon Sep 29, 2008 10:19 am Post subject: |
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| Hi Roddick, I don't think its only the governors who'd be the decision-makers. You're forgetting the insurance regulators. Insurance regulators across many states would not let the decision come from the market alone. Some of the regulators would just believe that lesser competition would help keep the rates at bay. Fatman |
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fatman
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| Posted: Mon Sep 29, 2008 10:39 am Post subject: |
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Hi,
There are insurance regulators who'd always scream at the top of their voice and try to prove that they have no control over the rates. Again see, there are states like NY wherein they do not encourage pre-approved rates, but then again these states won't allow unjustified rate hikes. An adjuster friend would even say that they have the proof of rates being lesser across states wherein the regulators have more control over the system.
Thanx, Roddick |
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roddick
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| Posted: Mon Sep 29, 2008 11:25 am Post subject: |
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Hey guys, to much of our surprise Geico has agreed to take back its rate hike proposal with the NY State insurance department. The rate hike proposal was for both Geico & Geico General who together constitute around 75% of the auto policies in NY. You know how that happened?
The Geico people had a word with the NY state insurance dept. regarding the revised gas prices which are bringing down the number of miles covered by the average NY drivers. Plasticmind
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Plasticmind
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| Posted: Mon Sep 29, 2008 11:37 am Post subject: |
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Hi, I'd listened to all that has been said about the circular letter, which mandates all insurance carriers (who had forwarded their rate-hike requests) to present a supplement depicting their evaluation of the rates as well as the effects of reduced driving on the rates. This analysis would be taken into account before the insurance dept. finally allows the filing of rates. Hope that's news again!
Roddick |
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roddick
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| Posted: Mon Sep 29, 2008 12:12 pm Post subject: |
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Hi all,
I had the opportunity to go through an article a couple of days back wherein it was clearly stated that the following factors have been identified as some of the probable causes influencing the claims costs:
* Increasing injury claims
* Expensive costs of repair
* Costly health care treatments
* Increasing lawsuits
Apart from these noted factors, we can't also forget the 'fraud element' which is eating on the pillars of this powerful industry. Perhaps it constitutes greater than a quarter of the total number of personal injury claims. So, you could easily imagine what price structures we'd come across in the near future.
Regards, Fatman |
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fatman
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| Posted: Mon Sep 29, 2008 1:30 pm Post subject: |
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Hi,
If we'd start empathizing with the private insurers, the only fact that they are so determined to earn profits would surface. They would often come up with theories depicting how the provincial governments should be responsible for rate checks. Till a bill gets passed, a good way of cost control would be through pulling the deductible.
Roddick |
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roddick
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| Posted: Tue Sep 30, 2008 7:13 pm Post subject: |
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All insurance rates are approved by the state that the insurance is sold in. For example, I am in Tennessee. My company submits rates for approval by the state before any increase can come to effect. There are times that the states turns down the request - so the rates have to be lowered before getting approved.
Fatman is right on his list of five reasons for a rate increase. That is why you see the list of the most stolen cars every year - and also the crash test ratings. All these things come into play when determining rates.
Fatman did leave one out though - the color of the car.
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