Consumer Federation of America Releases New 'Report,' NAMIC Comments

Statement of Robert Detlefsen, Ph.D.
Vice President of Public Policy
National Association of Mutual Insurance Companies

Consumer Federation of America Releases New 'Report,' NAMIC Comments

“CFA’s 'report' is not a report; it’s a press release. A report that describes research findings should contain, at minimum, a detailed description of the research methodology that was used, including an acknowledgement of any limitations that could influence the findings. CFA’s press release provides none of this.

“CFA suggests that what it calls ‘non-driving-related’ rating factors are not predictive of risk; however, the only evidence it offers for this assertion is a public opinion survey. CFA simply assumes that the only relevant risk factors are those involving accident history. CFA’s entire critique is based on this one false assumption.

“CFA makes no attempt to determine the relative weight the five insurers in its study assigned to the various risk factors cited. For example, the fact that its imaginary ‘receptionist’ had been without insurance coverage for 45 days may explain much of the variation in the quotes that CFA says it obtained. One way to test this would be to perform a series of experiments in which the ‘receptionist’ and the ‘executive’ are given different mixes of risk variables. For example, what would the quotes look like if the ‘executive’ had been without coverage for 45 days, while the ‘receptionist’ had continuous coverage? When pressed by a reporter about the report’s lack of methodological rigor, CFA replied that its work had been ‘labor intensive,’ suggesting that CFA would be incapable of doing a proper study. Such a response underscores CFA’s lack of credibility.

“As in its previous ‘reports,’ CFA limits its inquiry to just five companies, aiming most of its criticism at four of them, ignoring the fact that dozens of insurers compete in the 12 cities it focused on. A simple way to determine the amount of premium that drivers with different risk factors pay for auto liability insurance would be to survey independent agents in particular cities and zip code areas. Such an approach would yield results far more reliable and meaningful than the crudely tendentious method employed by CFA.”

Contact: Lisa Floreancig
Public Affairs Director - State & Policy Affairs