CFA Submitted Comments to State Insurance Commissioners on the III/CAS Report “Insurance Rating Variables: What Are They and Why They Matter”

CFA issues a letter responding to the  Insurance Information Institute (III) and the Casualty Actuarial Society’s (CAS) recently issued a paper on auto insurance rating factors, which was  triggered by the “recently generated discussion within the United States” on “the use of some rating factors.” The paper, Insurance Rating Variables: What Are They and Why They Matter,  notes that “some states have even passed legislation controlling the use of certain variables.”

This paper is clearly a reaction to a series of studies conducted by the Consumer Federation of America (CFA) on the topic. Over the past several years, CFA has been critical of the use of certain socio-economic factors in auto insurance, which are not driving related and which act as proxies for rates based strictly on income. These factors generally have the effect of driving up the cost of state-required auto insurance for low- and moderate-income Americans, even when they have pristine driving records. State-required auto insurance has, in significant part due to these unfair factors, or “rating variables” to use the III/CAS term, become unaffordable for many of these drivers. Read more below.

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