I was thinking about auto insurance the other day – specifically mine. The impetus was that I had just heard that commercial from Allstate which tells us that they will send safe drivers a check for every six months they go accident free. While I don’t know how much Allstate charges in their premiums to pay for this rebate, it got me thinking.
Since I’ve been with my insurer for quite a few years and have never had either an accident or received a ticket (for over twenty-five years), I thought I would be what I presume most insurance companies consider a safe driver. I was getting ready to call to find out, given my spotless history, whether the rate I was currently paying couldn’t be negotiated down. Just then the mail truck pulled up and my letter carrier dropped my daily dose of catalogues and a few first class items. One of those was my auto insurance renewal packet.
There I was thinking about my auto insurer and they were thinking about me. Hence the title for this post.
When I returned from the mail box I opened this which contained quite a few sheets of paper – twelve to be exact describing both my policy coverage, my premium costs and my new insurance identification cards, effective mid-January. (As one of the “discounts” I receive is for having a paperless account with my insurer, I can only imagine what I would get if I had the old send it in the mail on paper type of policy).
You can imagine my surprise, poised as I was to advance my argument that I should actually be getting a discount beyond all those I now receive because of my driving record, when I saw that my insurance premium had not only not remained at the same level as during the past several years – it had increased by 30%.
So I picked up the telephone and called my insurer. First, there was the eleven digit phone number; then there was selecting “2” because I was an existing customer; next I got to key in my eight digit policy number; then I got to verify that I still knew my birthdate – so I typed those six digits in; then, since there were probably others of their customers who shared my birthday, it was the last four digits of my SSN. Finally, the computer system figured that I was both who I said and knew who I was and it then transferred me to “the next available customer service representative.” Ten minutes later.
The nice young lady asked how she could help me and rather than mince words, I asked her how I could get my insurance premiums below the level that I had been paying, let alone lower than their currently quoted rate. (I guess this was the first time the question had been posed to her as there was a noticeable lull in her end of the conversation).
So she reviewed my “case” to make sure that the quote was right and that I was being credited for all the “discounts” for which I qualified.
Let’s see – I had an EFT Discount; Home Owner’s Discount; Online Quote Discount (which means I dealt with the company directly and they were able to stiff an agent out of a commission); Continuous Insurance Discount; the Platinum Three Year Safe Driving Discount (I guess any time period beyond that is outside the realm of their imagination or experience); Five-Year Accident Free Discount (“Ditto”); Airbag Discount and “Snapshot” Discount (the program in which a driver installs a device in their car and the insurer monitors their driving habits. I had gotten the maximum 25% discount they allowed as part of this program).
So I had all these discounts and a 30% premium increase. It just didn’t add up to me so I asked her the reason for the increase. What had I done to offend them or cause them to lose sleepless nights over my driving?
The answer I received was that they had experienced “a significant increase in their claims and were passing those costs along to all their customers.”
My first, almost involuntary response was, “Well why don’t you send those customers who are responsible for this increase the bill for it and leave those of us who are faultless drivers and whose premiums represent 99% profit to you alone?” Perhaps it’s just me but I thought that seemed reasonable.
At least I was vindicated that nothing I had done or left undone was the cause of this increase. Although that was small satisfaction.
Well, of course, I knew when I made this call that I was dealing with a person who has less authority than the computer system that generates these premium notices. But once in awhile, it is nice to firmly (but politely) express your opinion to the representative of a company that will collect hundreds of thousands of dollars from you over the course of your lifetime – if you let them.
So I explained that I was sorry to consider terminating our relationship – but I was going to shop around for another company which could provide me with the same coverage, identification cards and a lower premium. And I hung up.
As I was thinking about this afterward a thought suddenly occurred to me. Was an increase in the number of vehicular accidents really the reason for this raise in premium rates? Or was it something else.
After a little investigation, I discovered that the number of car accidents in Clark County, NV is actually down by 9.2% in the six month period ending June 30th compared with the same period last year. (This was the most current data I could locate), and would have been data that my insurer used since, appropriately, insurance rates are based on locale. So the answer I got from my insurer’s representative was completely bogus. I do not blame her for answering that way as I’m sure that she was instructed to do so by her superiors.
That leaves only two other answers that I could think of which would explain the premium increase.
First, the company wants to make more money and is raising premiums to accomplish that goal. Okay, I can understand that. I can also understand that is not the answer you would want to give your clients if you hoped to retain them.
Second, and I say this realizing that this is speculation on my part – is Obamacare. We know that mid-sized and large companies across the country are trying to find ways to cope with the costs inherent in this bill. Some are reducing employee work hours to avoid having to pay for their health insurance or the head count penalty tax if they do not provide it.
We also know that for those employers who are left with a large workforce that their health insurance premiums are going to see a massive increase. This might give you an idea of how the cost of health insurance is exploding. Social Security recipients will be getting a 1.7% increase in benefits and a 5.0% increase in the cost of their Medicare Part “B” premiums next month. And the increase in Part “B” is scheduled to go up an additional 20% over the 2013 rates in 2014.
Any reasonable businessman is going to try to find a way to maximize profits. That will take either the form of charging more for their products and services or reducing costs. And when you have a cost that is as mind-boggling as Obamacare, one way to defray that expense is to pass it along to customers. And I suspect that is the real reason that I got my 30% premium increase renewal notice.
If my assumptions are correct, this is not a tax on the super-wealthy or the moderately well-off. Rather, it is a tax that everyone who drives a vehicle will pay. It is a hidden tax under the guise of being a premium increase.
There is one bit of irony in the whole thing. The Chairman of the Board of my soon to be former insurance company is Mr. Peter B. Lewis. He has been one of the largest financial contributors to President Obama and has long been involved with a cadre of liberal-minded thinkers who share the President’s view of reshaping America into a socialist paradise.
And you might ask the name of this company. It is “Progressive” Insurance.