CHICAGO, IL — The following statement is in response to an auto insurance study on zip codes released today by the Consumer Federation of America (CFA). This statement can be attributed to Dave Snyder, Property Casualty Insurers Association of America, vice president.
“Territorial rating is a well-established rating factor used across the country and comprehensively regulated by each state. As an industry, we work hard to assign the most accurate rate to individual policyholders. However, it is indisputable that insured losses and expenses are higher for some areas compared to others and that must be proven to have the rates approved by insurance regulators. Some of the reasons why losses vary among the different geographical locations include weather, litigation costs, traffic congestion, and road quality, all factors that impact the potential for an automobile accident. Because insurance losses vary broadly among geographic areas, there is a need to make territorial distinctions for rating purposes.
“Ignoring a driver’s location does not reduce the likelihood a claim will be filed, it simply transfers the cost of that claim across the pool of all insured drivers, resulting in significantly higher premiums for all drivers, regardless of their risk.
“Insurance rates should adequately reflect the level of risk found in each territory, so that all insured drivers throughout a state pay their risk-based price.
“The report, itself, makes clear that there is significant competition that reflects the loss patterns of the companies. Because the auto insurance market is highly competitive, consumers have a large variety of choices. As a result, if a consumer is not happy with an insurance quote or the cost of their insurance, we encourage them to shop around for a better price or another company that best fits their needs.
“The release attached to the CFA report makes allegations of bias against insurers that are not supported by any evidence and such bias is banned by state law. Insurers fully comply with the laws of each state.”