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 Low-risk drivers should pay less for auto insurance, and premiums have closely tracked broader U.S. economic trends for decades, Triple-I told the U.S. Treasury Department's Federal Insurance Office (FIO) this week.

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In a letter responding to a federal request for information, Triple-I stated that US auto insurers determine the exact value of their policy using a variety of rating factors. All of these factors must be consistent with the laws and regulations of the state in which the auto insurance policy is sold.

"There is no credible evidence that insurers charge more than they do, either in the broader market or in specific subdivisions, such as neighborhood, race, income, education or occupation," Triple-I said. The letter also states that the rating factors used by US auto insurance companies for the value of their policies are constantly being re-examined not only to meet their objectives but also to ensure their accuracy and reliability.

"If the rating factors do their job well, they make insurance relatively cheap for some and very expensive for others," the letter said. "In both cases, the assessment is correct. Drivers who present less risk pay less for coverage.

The response to FIO's information request demonstrates how the appropriate price for an insurance policy varies greatly from customer to customer and from state to state. Insurance is regulated by state governments.

"Insurance companies and their actuaries are focused on finding factors that ensure every customer pays the right rate," Triple-I said. Rates are based on historical loss experience for similar risks. The price that consumers pay for insurance coverage creates a premium.

U.S. Critics of the auto insurer pricing practice have expressed concern that certain rating factors, such as credit-based insurance scores and the geographical location of the customer's residence, discriminate against low-income drivers and minority groups. Triple-I explained that removing any rating factor - for whatever reason - forces low-risk people to pay more for auto insurance and allows high-risk people to pay less than they should for auto insurance.

Intervention can backfire

"The removal of the factors does not affect the truth they reveal, and if the factors indicate that the cost to the consumer needs to be higher, then banning it does not change the underlying cost which is the reason for the high rate," he said. I said. .

Regulators frequently interfere in the rating process to make insurance less expensive for certain groups, citing the need to make insurance "affordable".

"These interventions, however well-intentioned, can dramatically backfire," says the Triple-1 letter, "increasing overall costs and severely reducing availability, as well as hindering innovation that could address this issue."

Real problems need real solutions

Real solutions exist to make insurance more affordable, Triple-I says: "These solutions come not by tinkering with how insurance companies set prices but by addressing the costs that insurance covers."

Improving the transportation environment and addressing social problems that often force minorities and low- and middle-income individuals to live and drive in situations where auto insurance is one of the most cost-effective solutions suggested.

Extensive Triple-1 research shows that rising claim costs are the primary factor driving the rise in auto insurance rates.

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