Misguided legislation intruding on state insurance regulation and restricting underwriting by banning the use of actuarially-sound rating factors will cause rates to increase for most consumers, harming many of those it purports to be helping, the National Association of Mutual Insurance Companies said today.

“The use of rating factors is approved by state regulators for a very simple reason – they have been actuarially proven to correlate with the risk a potential policy presents,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC. “Numerous studies by the federal government, state regulators, and academic institutions have examined this issue and reached the same conclusion. When predictive factors are taken away, rating becomes less accurate, and safer drivers are forced to subsidize coverage for riskier drivers.”

Reintroduced in the House of Representatives May 29 by Reps. Bonnie Watson Coleman, D-N.J., Rashida Tlaib, D-Mich., and Mark Takano, D-Calif., the Prohibit Auto Insurance Discrimination Act, would prevent insurers from accurately matching risk to rate through an overly broad federal prohibition on the use of a multitude of proven driving risk factors such as gender, credit based-insurance scores, and geographic location. This would limit an auto insurer’s ability to accurately assess and price risk when underwriting and rating policies, which will ultimately lead to less risky drivers subsidizing coverage for those who present a greater risk of loss.

Numerous independent studies have found that the use of non-driving factors help insurers more accurately assess risk and offer rates that are actuarially sound, while affording consumers fair treatment. No single factor accurately measures the totality of risk represented by an individual consumer. The use of more risk-based factors means that consumers have more choices when it comes to insurance, rather than a one-size-fits-all product at a significantly higher price.

“Risk-based pricing is what enables insurers to offer competitive rates and levels of coverage while remaining financially stable,” Grande said. “Every state and territory has laws and regulations governing the use of non-driving factors, but the PAID Act would have the federal government force insurers to pretend that all drivers represent the same level of risk, making riskier drivers harder to identify and increasing rates for everyone.”

Post Details

Publish Date

June 3, 2025

News Type

  • Media Release

Topics

  • National
  • Underwriting Freedom

Points of Contact
Matt Brady
Matt Brady
Senior Director of Advocacy Communications