A group composed of Massachusetts insurance agents are lobbying Congress to implement reforms on auto insurance legislation in their state. The group wants lawmakers to pass bills that would standardize the way auto insurance companies compute an applicant’s premium rates. They said that standards should be based exclusively on a person’s driving records and not on occupation, income, and educational levels.
In many parts of the US, auto insurance companies determine premiums based on employment history, school records, and credit standing to name a few. For example, an electrician or construction worker is expected to pay more for auto insurance compared to individuals who work in white-collar jobs such as lawyers, accountants and medical doctors. To many insurers, a person’s occupation and income hold more weight than driving records or history.
Massachusetts auto insurers fortunately have fewer stringent standards than the rest of the U.S. However, without specific legislation in place, the state’s insurance commissioner can widen the scope of existing standards to his desire.
An auto insurance agent interviewed said that the only factors insurers should consider when assessing premiums is an applicant’s driving experience, driving history and residence. Other factors should be excluded since it does not relate directly to a person’s ability and capability.
Most Massachusetts residents share the same sentiments. One motorist interviewed said that auto insurance companies should look at a person’s accident history. If a driver has a long record of traffic violations, then he should be deemed a high risk and should thus pay higher premiums, regardless if he holds a prestigious occupation or not. If an applicant has a good driving record, he should be rewarded with lower premiums even if his salary falls under the low income bracket.
A woman interviewed said that times are rough and that money is hard to come by. She added that keeping a good credit score nowadays can be very challenging and daunting. She complained that commodities and necessities are getting more and more expensive, while salary levels have not paced as much. Car insurance premiums are also rising and for people like her whose salary has not much seen much change in recent times, coverage is starting to look more and more like a luxury.
Insurance companies defended their current practice saying that seemingly unrelated factors help reveal one’s risk profile. Credit score, for example, is a good indicator to know if one has the capability and means to keep up with insurance payments — and the same holds true for income. The higher the income is of a person, the more capable he is of paying his premiums on time.
