PCI Says Consumer Federation of America Report Distorts How Auto Insurance Works for Consumers

CHICAGO–(BUSINESS WIRE)–The following statement by the Property Casualty Insurers Association
of America (PCI) is in response to the latest study by the Consumer
Federation of America (CFA) regarding auto insurance rating.
following statement can be attributed to David Snyder, PCI’s vice
president of policy development and research.

“The central flaw in the Consumer Federation of America’s report is that
all factors, including the ones they focus on, are used because they are
proven to increase the accuracy of predicting risk of loss. It is
important for consumers to understand that insurance pricing must be
based on actuarial science and is subject to ongoing and rigorous
regulation which ensure that all rating factors comply with the law.

“Consumers want insurance to be based on the likelihood of someone
having an accident or filing a claim. Rather than just relying on state
motor vehicle records which are plagued by many omissions and unreported
events insurers use a wide variety of factors that have proven to be
associated with risk of loss in order to draw the most accurate picture
of each driver.

“Another flaw in the CFA’s report is that their premium calculations do
not include many variables that can bring down rates such as miles
driven and usage based insurance.

“Rather than rehashing the same old critiques regarding the lawful
practice of risk based pricing, we urge the CFA to join with insurers
and work with us to reduce accidents, and cost factors that drive auto
insurance costs for all consumers such as distracted walking and driving
and drugged driving. Consumers benefit from risk classification factors
that distinguish lower-risk policyholders from higher-risk
policyholders. The more risk assessment tools available to insurers, the
more accurately risks can be priced. In this way, premiums paid by
insured drivers are more equitable. However, we do agree with the
authors who stated that insurers do not use income in pricing nor would
regulators permit that.”

PCI is composed of nearly 1,000 member companies, representing the
broadest cross section of insurers of any national trade association.
PCI members write more than $183 billion in annual premium, 35 percent
of the nation’s property casualty insurance. Member companies write 42
percent of the U.S. automobile insurance market, 27 percent of the
homeowners market, 32 percent of the commercial property and liability
market and 34 percent of the private workers compensation market.


Nicole Mahrt-Ganley
916-440-1116 or cell 916-616-5855