Auto Insurance

Consumer Groups Call on State Regulators to Conduct Fact-Based Investigation of Auto Insurance Affordability and Availability

Groups Denounce Insurance Industry Trade Association Obstruction and Lies

Washington, D.C. — State insurance regulators must reject an insurance industry effort to undermine research into auto insurance availability and affordability for low-income Americans, insurance experts demanded in a letter sent to the National Association of Insurance Commissioners (NAIC) today. Bob Hunter of Consumer Federation of America (CFA) and Birny Birnbaum of the Center for Economic Justice (CEJ) wrote that state regulators should, instead, conduct a fact-based, objective study of how much consumers pay for auto insurance and how much of a burden these insurance costs are on traditionally-underserved communities.

The letter is available here.

CFA and CEJ are responding to an insurance industry trade association campaign of obstruction and deception relating to a proposed report on insurance availability and affordability and a report “outline” published last August by the regulators.  The consumer groups urged regulators to reject the trade associations’ “miasma of misinformation.”

Regarding this campaign by the industry, summarized in a letter and comments by the trade association PCI, the consumer groups wrote:

PCI’s bad-faith arguments about trade secrets are part of its broader effort to undermine the work of the Auto Insurance working group to examine issues of affordability and availability of personal auto insurance.  PCI’s argument that only insurers and regulators have the knowledge and skills to analyze insurer data and evaluate these issues is, again, absurd and factually incorrect.  It is profoundly anti-democratic for the practices of insurers and the regulatory oversight of those insurer practices to be unaccountable to the public.

CFA and CEJ urged regulators to start by articulating the purpose of the study consistent with the goals of the working group.

The consumer groups asked the regulators to start with the questions that need to be answered:

  • How do we measure such availability and affordability of personal auto insurance?
  • How does availability and affordability vary across different types of communities defined by geography, prohibited classifications and permitted classifications?
  • Are there communities or groups of consumers for whom availability and affordability is limited, however defined?
  • If availability is limited for some groups of consumers, can we identify the causes of availability problems?

Drivers in every state except New Hampshire are required to purchase auto insurance.  Therefore, state regulators have a special obligation to ensure that the product is available and affordable so that drivers are able to comply with laws. The NAIC should be primarily focused on addressing its responsibility to serve as an unbiased resource for state regulators, according to consumer groups, and it should reject the aggressive lobbying efforts of industry geared solely toward protecting company interests.

Contact: Birny Birnbaum, 512-784-7663; J. Robert Hunter, 703-528-0062