Throughout the history of property/casualty insurance ratemaking in America, insurers have insisted that their rates are cost-based and that to introduce subsidies would be inappropriate. Yet, departure from cost-based prices and introducing subsidies into the rates are at the heart of PO, according to Towers Watson (TW). PO is something new and dangerous, untethering prices from cost and exposing consumers, required to buy auto insurance by the states, to unfettered price gouging.

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