Using quotes for minimum auto liability coverage for five of the leading writers of auto insurance in the nation, we analyze several questions relating to the actuarial soundness of auto insurance pricing in America. First we consider the premiums quoted by each insurance company in relation to the other companies. We review the variation of rates charged to identical drivers by the insurers and discuss the question: Do the premium differences among companies raise actuarial soundness and market competition issues? In the second part of the report, we analyze the difference in price between high economic status drivers and low economic status drivers to measure the cumulative impact on price of five socioeconomic rating factors. We then discuss the question: Do the price differentials, and the variation in price differentials, between high and low economic status raise questions of actuarial soundness of the factors and pricing mechanisms? We also consider whether the use of these factors comports with the standards of actuarial practice. Finally, we offer a series of recommendations to state insurance department actuaries and, ultimately, commissioners as to how they might expand upon this research to determine if rates are actuarially sound in their states.

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