INDIANAPOLIS (April 24, 2008) - The National Association of Mutual Insurance Companies (NAMIC) emphatically disputed claims made today by the Consumer Federation of America that said laws requiring insurers to get advance approval before setting auto rates actually benefit consumers. The CFA study said rates have risen more slowly in states that impose tighter regulation on insurers.
“We hold exactly the opposite view than the CFA as there is a large body of rigorous, independent research that arrives at the opposite conclusion ,” said Neil Alldredge, vice president-state and regulatory affairs. “Prior approval laws, such as those found in California and New York, harm consumers by keeping rates high and discouraging competition.”
The study places undue emphasis on the average percentage increase in automobile insurance rates during the time period studied, while ignoring the fact that the states with the highest rates today are prior approval states, Alldredge explained. “California, whose regulatory system is hailed by the CFA as ‘uniquely effective,’ currently has the second highest auto insurance premiums in the nation.”
The study also claimed that states with less regulatory structure over auto rates had higher rate increases and less competitive markets. “Taken to its logical conclusion, that would mean Illinois should have the highest rates in the country, since it is an open competition state,” Alldredge said. “In fact, Illinois ranks 28th.”
Alldredge also noted that:
“Vritually every piece of evidence indicates that consumers are better served by open markets,” Alldredge said. “The ‘consumers’ that are members of the CFA ought to be deeply concerned that their organization is clearly advocating for a system that results in high prices and fewer choices.”
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Posted: Thursday, April 24, 2008 12:00:00 AM. Modified: Friday, April 25, 2008 11:57:57 AM.
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