As the Federal Insurance Office hones in on underwriting practices in the auto insurance arena, two stories in Insurance Business got readers going over some of the nuances in fairness and common business sense when it comes to how insurers calculate premium.
News that auto insurers consider factors like marital status, age and gender got some readers fired up, but it was nothing compared to reaction to a NYPIRG report revealing that many of the nation’s top carriers use factors like education and occupation to underwrite risk.
IBA reader Barbara Grohoski came down on the side of consumer advocate NYPIRG, commenting:
I totally agree that only your driving record, age, and location of where you live not your occupation and earnings should be considered fair to all drivers. just because a person could not afford college or are better with their hands should not count against them as a person, good client etc...
Dale Jr took a simpler view of the matter, however. He said:
If the statistical data shows a certain group has a higher propensity to have a claim, that group should pay more in premiums. Really it's pretty simple...
Many IBA readers seemed to agree that best practice in underwriting means allowing the free market to work without interruption. However, an equally strong-willed group protested that there must be some curbs on unadulterated capitalism.
To that effect, Steve Riggs concluded:
Well, Michael, free market principles without any rules, regulations, or sense of justice can sure be problematic. The free market has people running it that are not always looking out for interest of the consumer. So they must have some standards.
Thanks to all our readers who commented this week!
