Wednesday, April 13, 2011

Let's call the whole thing off

I happen to know quite a bit about insurance, for reasons of career and education.  But that knowledge is pretty much unnecessary to decipher that this is a terrible idea:
Mandated increases in auto insurance coverage will be rolled back under legislation signed by Gov. Scott Walker on Tuesday.

The measure rolls back coverage minimums passed by the Democrat-controlled Legislature in 2009 but would still require motorists to have coverage.

"This is one more step toward empowering consumers across the state of Wisconsin," Walker said at a Capitol bill-signing.
"Empowering consumers."  Sounds awesome, doesn't it?  Except it really isn't.  And there's no reason for it.

The group Citizen Action of Wisconsin has released a report that questions insurance industry claims that changes made by Democrats caused an increase in insurance costs of at least 33%.

Wisconsin historically has had some of the lowest car insurance rates in the country.

The website lists Wisconsin car insurance rates as of March as being 40% below the national average - similar to the rates in the surrounding states except for Michigan, where rates are slightly higher than the national average.
So this obviously isn't really about allowing insurance companies to cut premium.  And even if it was, I can tell you that most of the time when consumer protections get loosened up and insurance companies get more leeway, they'll almost always find a way to justify either keeping premiums exactly where they are and reducing benefits, or raising premiums.  It makes perfect sense.  Why would Insurance Company XYZ suddenly decide they want to make less money per insured?  And rolling back the coverage limit from $50,000/$100,000/$15,000 (for per person/per incident/property damage) to $25,000/$50,000/$10,000 just gives insurance companies cover to charge the same while providing less coverage.  But wait until you see some of the other sweetheart provisions.
The measure also would allow insurers to put drivers buying insurance for the first time into a high-risk category, allowing them to charge higher premiums.

It also includes a provision that would allow insurers to insert clauses into their policies that could lower the amount drivers collect when they are hit by underinsured drivers.
This is an auto insurer's dream come true.  Your teenage child who is all excited about getting their driver's license at 16?  Prepare to pay outrageous premiums to provide coverage.  And as if getting hit by someone without enough insurance, or no insurance at all, wasn't already a worrisome proposition, now if that does happen, your own insurance company can screw you too.

So, summing this up: Pay the same or possibly more for less coverage.  Check.  Pay out the ass to cover first-time drivers (read: your children).  Check.  And get left up a creek without means of propulsion if some moron who was too lazy to have insurance happens to injure you in an accident.  Check.  And this is what Scott Walker calls "empowering consumers."  That's an interesting name for it, because I would call it a massive middle-finger to consumers.  I guess Scott Walker says po-tay-to, while I say po-tah-to.

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