\”GEICO is disguising what has already been proven – that they believe its ok to charge the white collar and rich educated professionals nearly twice those that are blue-collared.\”
Actually, it\’s exactly the opposite of what you stated.
\”Furthermore, are we all missing the FACT that you need to prove MORE than losses correlating actuarially to a sub-class you distinguish. YOU NEED TO PROVE – by law – a correlation to RISK.\”
Losses shown to be directly correlated to a specific class over the long term does prove a correlation of risk.
If you are going to call people an idiot, you may want to make sure you\’ve got the facts straight. Otherwise you are the only one appearing to be an idiot.
Is it wrong that less well-to-do people have more poorly built houses with poorer insulation and that, factors like size being equal, they use more electricity and therefore pay more for their electric bills? Of course not! They used the electricity.
Are you also against rating (and solely rating for most companies) based on gender, which one can\’t choose? Everyone chooses their own level of education and career. Sure, some are able to do so more easily, but no male has the opportunity to be charged female (lower in most cases) rates for insurance. Few people disagree that males should pay more, because they generate higher claim costs (this characteristic is less, but still very, prevalent.)
So, why is it wrong for insurance companies to likewise charge those that demand the most loss payments a greater premium? What makes you think insurance companies should be run like a Socialist system, where they must take a loss on certain groups of people to fund others?
No one is arguing that losses are correlated to education and occupation classes. Make it clear, it isn\’t about losses. Just because losses are correlated to a class doesn\’t permit that class to be segregated and rated upon differently. If it were, we could blatantly charge less affluent more for all insurance. Isn\’t that exactly what GEICO is doing? Whoever argues that it is okay to do what GEICO is doing – is simply endorsing its okay to charge more for less affluent – lower income – and thus racial minorities. Don\’t play stupid. What do you think EDUCATION levels acheived and white collar job people together equal in the U.S.? Do you think it takes a rocket scientist to think it translates to INCOME levels? Are you blind? Def? Or stupid? OF COURSE IT DOES> So, loss ratios aside, is it OK for a car insurance company to charge 2 times more for people who are poorer? EVEN If it doesn\’t correlate to risk? If so, let\’s start charging more for life insurance for blacks than whites! We can CATEGORICALLY show that blacks have worse mortality rates than whites, and in that example of life insurance, it is RELATED to risk more than car insurance. USE your head, it\’s undisputed education = income. Income = Race. Do the math dummies.
I don\’t represent GEICO and am currently at a competitive disadvantage to them in NJ. However, I still was happy to see Commissioner Orr speak out.
What possible reason could GEICO or any other insurer have for using any rating variable other than to match price to cost. Does CFA honestly believe that any insurer has some sinister motive or that they just dream up rating factors without statistical evidence to back them up? Last I checked with my colleagues, the industry had no plans to achieve world domination through auto insurance rating plans.
I think all carriers in NJ should have the same opportunity as GEICO.
Mr. Orr should make sure when he asks Warren Buffett for a job after office, he waits at least a year or two so it isn\’t so obvious WHY he is siding with them. Listen, when the second richest person on earth tells you something, you listen. GEICO is disguising what has already been proven – that they believe its ok to charge the white collar and rich educated professionals nearly twice those that are blue-collared. Solely is being harped on as the word that GEICO can deny. Bottom line is that the use of education and occupation is used independently to determine rates – up to 124% in some cases. HOW about that plain- and simple. Furthermore, are we all missing the FACT that you need to prove MORE than losses correlating actuarially to a sub-class you distinguish. YOU NEED TO PROVE – by law – a correlation to RISK. There is NO proof that being more educated makes you a lower risk to get into an accident – most studies show the opposite. Poorer people will ALWAYS have a higher loss ratio than rich people because they MUST file every claim due to their lack of disposable income to pay small claims out of their pocket. People must start waking up – losses correlating to a class is NOT synonomous with risk correlating to a class. DUH!
Well, so it finally comes out – every risk factor, even if actuarially supported, is ultimately accused of being nothing more than a proxy for race. GET OVER IT!! Nothing could be farther from the truth. There are probably more poor non-minorities in this country than minorities.
Believe it or not, insurers don\’t sit around all day trying to figure out how to cheat minorities. Insurers are engaged in a highly competitive marketplace, where many of the cost drivers are uniform, and are motivated to provide fairly uniform products profitably. Thus, the constant effort to find rating factors that are predictive of loss propensity. Remember, nobody knows exactly how or why credit scoring works, but there have been multiple INDEPENDENT studies that prove that it does.
So, if a rating factor is found to be actuarially sound, and doesn\’t violate any of the fundamental prohibited classes, then insurers should be able to use the factor. Then it\’s up to the public to figure out how to improve their own risk profile.
Can insurers create illegal profits by collecting (actuarially factored) premium dollars you and I are (knowingly) owed by actuaries, and then use adjusters to deliberately and deceptively misadjust claim loss values?
Are actuaries ignorant of deceptive claim settlement practices that can give them synthetic loss value data?
Does Allstate Insurance Company, and their associate, Pilot Claim Service, take the lead in the insurance industry in requiring their adjusters to \’knowingly underpay every claim\’?
Is State Farm Insurance, Safeco, USAA, Farmers and other insurers following the Allstate / Pilot lead in Texas, Florida, Maryland and elsewhere?
From [catadjuster.org] a mature Allstate Insurance Company claims examiner replies to an aspiring contractor turned insurance adjuster;
\”Brooks Todd Posted – 12/18/2003 : 19:10:52
——————————————
I just recieved my adjusters liscence, from The Great State of Texas. I have 22 years in construction (framing, roofing, sales & concrete). I am an excellent estimator, and can build anything from a dawg house to a church.
I am having a hard time finding a job in the adjusting field. I know what my angle is now. Imagine having an adjusters liscence, and being a contractor. I am calling Allstate tommorow. You have to change with the times.
I would not advise calling Allstate if you wish to keep your integrity intact.
After almost 7 years with them and having held a variety of positions, including the sole Quality Evaluator for the entire southern half of Texas, I finally became fed up with their approach to requiring every adjuster to KNOWINGLY UNDERPAY every claim and left them this past July.
The head of Allstate in Texas – Gary Briggs – had the nerve to stand up in front of an agent\’s meeting last spring and say (QUOTE) \”I love the new HOA+ policy! It doesn\’t cover anything and WE STILL GET TO KEEP THEIR MONEY!\”
I used to tell people whose claim I was handling that \”the good hands of Allstate were right here\” as I held my hands out for them. I could no longer do that in good faith and look myself in the mirror so I left.
One of these days the Texas DOI is going to catch up with their property handling practices and then it will all hit the fan!
Good luck with anyone else!
Kevin Hromas Country: USA | Posts: 75
Can insurers fat (2003, 2004, 2005) contingent profits be generated by such fraudulent claim settlement conduct?
Can claim loss values paid for by consumers be kept from them if adjusters don\’t estimate loss values that are inherently part of the loss?
Quote from an insurance regulatory agency;
\”–Indemnity is the basis and foundation of insurance coverage.
The objective is that the insured should neither reap economic gain nor incur a loss if adequately insured.
This objective REQUIRES that the insured receive a payment EQUAL TO that of the covered loss so that the insured will be restored to the same position after the loss as before the loss.
The calculation of this payment results in UNDER-compensation if an insurer deducts prospective contractors’ overhead and profit and sales tax in determining the actual cash value under a replacement cost policy.
Conversely, the inclusion of contractor´s overhead and profit and sales tax on building materials does not over-compensate an insured for the amount of the loss because these items represent part of the insured´s loss.
Generally, the objectives of indemnity will be met if actual cash value is calculated as replacement cost with proper deduction for depreciation.
–there is NO SITUATION in which the deduction from replacement cost of depreciation and contractor´s overhead and profit and/or sales tax on materials will be the correct measure of the insured´s loss.
–Premiums charged must not be excessive for the risks to which they apply.
Under a replacement cost policy, the liability limits of the policy and the premium paid by the insured are determined ON THE BASIS OF the replacement cost of the structure.
The VALUE of contractor´s overhead and profit, as well as sales tax on building materials, has been included in the limit of liability for which the insured has PAID premium.
If the insurer in determining actual cash value EXCLUDES costs that are INCLUDED IN the determination of liability limits, on which the insured´s premium is BASED, the insurer reaps an IllEGAL windfall because the insurer receives premium on insurable values for which loss may never be paid.\”
You must all start arguing on point. Here is the point, gender has a correlation to RISK of driving. Genetically, it can be proven that there is more likely a risk of getting a loss against for which the insurance is providing protection against. Let me make this clear – you are providing car insurance for protection against only three items: Injuries you charge to others from negligent driving, your own injuries if you are in a no-fault state for PIP, and the physical damage losses you cause to your own vehicle because of negligent driving or because your car is stolen or vandalized. PLAIN AND SIMPLE – please digest that. NOW, to use a class and segment it from the remainder of the population you CANNOT simply show that class has a correlation to losses for the insurer. IF this was the only criteria, we could use classes such as \”naturally blonde hair people\” and \”non-naturally blonde hair people\”. THe reason auto insurers CAN\’T use that criteria IS NOT BECAUSE they can\’t show a propensity of loss (Hypothetically), its because the traits of being blonde have nothing to do with RISK of driving negligently, or having your car stolen. This applies to education and occupation as well, there is NO PROOF even by GEICO that there is a correlation to being educated, or having a white collar job translates into ANY BETTER risk of driving negligently or having your car stolen or vandalized. LOSSES IN OF THEMSELVES DO NOT JUSTIFY USE. PLEASE GET IT THROUGH YOUR HEAD!
My points were to add weight to the on-going underlying issues of how insurers can be unfair, and contingent profit driven, in the damaged property / claim settlement conduct trenches…
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\”GEICO is disguising what has already been proven – that they believe its ok to charge the white collar and rich educated professionals nearly twice those that are blue-collared.\”
Actually, it\’s exactly the opposite of what you stated.
\”Furthermore, are we all missing the FACT that you need to prove MORE than losses correlating actuarially to a sub-class you distinguish. YOU NEED TO PROVE – by law – a correlation to RISK.\”
Losses shown to be directly correlated to a specific class over the long term does prove a correlation of risk.
If you are going to call people an idiot, you may want to make sure you\’ve got the facts straight. Otherwise you are the only one appearing to be an idiot.
Mike may have had a brain glitch with the white collar / blue collar thing.
However, his overall points seemed to be on the mark…
Is it wrong that less well-to-do people have more poorly built houses with poorer insulation and that, factors like size being equal, they use more electricity and therefore pay more for their electric bills? Of course not! They used the electricity.
Are you also against rating (and solely rating for most companies) based on gender, which one can\’t choose? Everyone chooses their own level of education and career. Sure, some are able to do so more easily, but no male has the opportunity to be charged female (lower in most cases) rates for insurance. Few people disagree that males should pay more, because they generate higher claim costs (this characteristic is less, but still very, prevalent.)
So, why is it wrong for insurance companies to likewise charge those that demand the most loss payments a greater premium? What makes you think insurance companies should be run like a Socialist system, where they must take a loss on certain groups of people to fund others?
No one is arguing that losses are correlated to education and occupation classes. Make it clear, it isn\’t about losses. Just because losses are correlated to a class doesn\’t permit that class to be segregated and rated upon differently. If it were, we could blatantly charge less affluent more for all insurance. Isn\’t that exactly what GEICO is doing? Whoever argues that it is okay to do what GEICO is doing – is simply endorsing its okay to charge more for less affluent – lower income – and thus racial minorities. Don\’t play stupid. What do you think EDUCATION levels acheived and white collar job people together equal in the U.S.? Do you think it takes a rocket scientist to think it translates to INCOME levels? Are you blind? Def? Or stupid? OF COURSE IT DOES> So, loss ratios aside, is it OK for a car insurance company to charge 2 times more for people who are poorer? EVEN If it doesn\’t correlate to risk? If so, let\’s start charging more for life insurance for blacks than whites! We can CATEGORICALLY show that blacks have worse mortality rates than whites, and in that example of life insurance, it is RELATED to risk more than car insurance. USE your head, it\’s undisputed education = income. Income = Race. Do the math dummies.
I don\’t represent GEICO and am currently at a competitive disadvantage to them in NJ. However, I still was happy to see Commissioner Orr speak out.
What possible reason could GEICO or any other insurer have for using any rating variable other than to match price to cost. Does CFA honestly believe that any insurer has some sinister motive or that they just dream up rating factors without statistical evidence to back them up? Last I checked with my colleagues, the industry had no plans to achieve world domination through auto insurance rating plans.
I think all carriers in NJ should have the same opportunity as GEICO.
Mr. Orr should make sure when he asks Warren Buffett for a job after office, he waits at least a year or two so it isn\’t so obvious WHY he is siding with them. Listen, when the second richest person on earth tells you something, you listen. GEICO is disguising what has already been proven – that they believe its ok to charge the white collar and rich educated professionals nearly twice those that are blue-collared. Solely is being harped on as the word that GEICO can deny. Bottom line is that the use of education and occupation is used independently to determine rates – up to 124% in some cases. HOW about that plain- and simple. Furthermore, are we all missing the FACT that you need to prove MORE than losses correlating actuarially to a sub-class you distinguish. YOU NEED TO PROVE – by law – a correlation to RISK. There is NO proof that being more educated makes you a lower risk to get into an accident – most studies show the opposite. Poorer people will ALWAYS have a higher loss ratio than rich people because they MUST file every claim due to their lack of disposable income to pay small claims out of their pocket. People must start waking up – losses correlating to a class is NOT synonomous with risk correlating to a class. DUH!
Well, so it finally comes out – every risk factor, even if actuarially supported, is ultimately accused of being nothing more than a proxy for race. GET OVER IT!! Nothing could be farther from the truth. There are probably more poor non-minorities in this country than minorities.
Believe it or not, insurers don\’t sit around all day trying to figure out how to cheat minorities. Insurers are engaged in a highly competitive marketplace, where many of the cost drivers are uniform, and are motivated to provide fairly uniform products profitably. Thus, the constant effort to find rating factors that are predictive of loss propensity. Remember, nobody knows exactly how or why credit scoring works, but there have been multiple INDEPENDENT studies that prove that it does.
So, if a rating factor is found to be actuarially sound, and doesn\’t violate any of the fundamental prohibited classes, then insurers should be able to use the factor. Then it\’s up to the public to figure out how to improve their own risk profile.
4-2-2006
Can insurers create illegal profits by collecting (actuarially factored) premium dollars you and I are (knowingly) owed by actuaries, and then use adjusters to deliberately and deceptively misadjust claim loss values?
Are actuaries ignorant of deceptive claim settlement practices that can give them synthetic loss value data?
Does Allstate Insurance Company, and their associate, Pilot Claim Service, take the lead in the insurance industry in requiring their adjusters to \’knowingly underpay every claim\’?
Is State Farm Insurance, Safeco, USAA, Farmers and other insurers following the Allstate / Pilot lead in Texas, Florida, Maryland and elsewhere?
From [catadjuster.org] a mature Allstate Insurance Company claims examiner replies to an aspiring contractor turned insurance adjuster;
\”Brooks Todd Posted – 12/18/2003 : 19:10:52
——————————————
I just recieved my adjusters liscence, from The Great State of Texas. I have 22 years in construction (framing, roofing, sales & concrete). I am an excellent estimator, and can build anything from a dawg house to a church.
I am having a hard time finding a job in the adjusting field. I know what my angle is now. Imagine having an adjusters liscence, and being a contractor. I am calling Allstate tommorow. You have to change with the times.
Brooks
khromas Posted – 12/18/2003 : 23:06:22
——————————————
Brooks,
I would not advise calling Allstate if you wish to keep your integrity intact.
After almost 7 years with them and having held a variety of positions, including the sole Quality Evaluator for the entire southern half of Texas, I finally became fed up with their approach to requiring every adjuster to KNOWINGLY UNDERPAY every claim and left them this past July.
The head of Allstate in Texas – Gary Briggs – had the nerve to stand up in front of an agent\’s meeting last spring and say (QUOTE) \”I love the new HOA+ policy! It doesn\’t cover anything and WE STILL GET TO KEEP THEIR MONEY!\”
I used to tell people whose claim I was handling that \”the good hands of Allstate were right here\” as I held my hands out for them. I could no longer do that in good faith and look myself in the mirror so I left.
One of these days the Texas DOI is going to catch up with their property handling practices and then it will all hit the fan!
Good luck with anyone else!
Kevin Hromas Country: USA | Posts: 75
http://72.14.203.104/search?q=cache:LH8RbB9s00UJ:www.catadjuster.org/forum/m_899/mpage_10/key_/tm.htm+gary+briggs+allstate+intentionally+underpay+&hl=en&gl=us&ct=clnk&cd=1
Can insurers fat (2003, 2004, 2005) contingent profits be generated by such fraudulent claim settlement conduct?
Can claim loss values paid for by consumers be kept from them if adjusters don\’t estimate loss values that are inherently part of the loss?
Quote from an insurance regulatory agency;
\”–Indemnity is the basis and foundation of insurance coverage.
The objective is that the insured should neither reap economic gain nor incur a loss if adequately insured.
This objective REQUIRES that the insured receive a payment EQUAL TO that of the covered loss so that the insured will be restored to the same position after the loss as before the loss.
The calculation of this payment results in UNDER-compensation if an insurer deducts prospective contractors’ overhead and profit and sales tax in determining the actual cash value under a replacement cost policy.
Conversely, the inclusion of contractor´s overhead and profit and sales tax on building materials does not over-compensate an insured for the amount of the loss because these items represent part of the insured´s loss.
Generally, the objectives of indemnity will be met if actual cash value is calculated as replacement cost with proper deduction for depreciation.
–there is NO SITUATION in which the deduction from replacement cost of depreciation and contractor´s overhead and profit and/or sales tax on materials will be the correct measure of the insured´s loss.
–Premiums charged must not be excessive for the risks to which they apply.
Under a replacement cost policy, the liability limits of the policy and the premium paid by the insured are determined ON THE BASIS OF the replacement cost of the structure.
The VALUE of contractor´s overhead and profit, as well as sales tax on building materials, has been included in the limit of liability for which the insured has PAID premium.
If the insurer in determining actual cash value EXCLUDES costs that are INCLUDED IN the determination of liability limits, on which the insured´s premium is BASED, the insurer reaps an IllEGAL windfall because the insurer receives premium on insurable values for which loss may never be paid.\”
http://www.tdi.state.tx.us/bulletins/b-0045-8.html
Actuaries base loss risk, in part, on claim adjusters loss payments, per management instructions.
Is addressing fraudulent claim settlement practices too large of a public issue for insurance regulatory agencies, or the judicial system, to handle?
Would the reinsurance market confidence level be undermined by such claim settlement conduct?
Are actuaries being misled by synthetic loss value practices?
Does intentionally underpaying claims equal grand theft of consumer premium payment dollars?
You must all start arguing on point. Here is the point, gender has a correlation to RISK of driving. Genetically, it can be proven that there is more likely a risk of getting a loss against for which the insurance is providing protection against. Let me make this clear – you are providing car insurance for protection against only three items: Injuries you charge to others from negligent driving, your own injuries if you are in a no-fault state for PIP, and the physical damage losses you cause to your own vehicle because of negligent driving or because your car is stolen or vandalized. PLAIN AND SIMPLE – please digest that. NOW, to use a class and segment it from the remainder of the population you CANNOT simply show that class has a correlation to losses for the insurer. IF this was the only criteria, we could use classes such as \”naturally blonde hair people\” and \”non-naturally blonde hair people\”. THe reason auto insurers CAN\’T use that criteria IS NOT BECAUSE they can\’t show a propensity of loss (Hypothetically), its because the traits of being blonde have nothing to do with RISK of driving negligently, or having your car stolen. This applies to education and occupation as well, there is NO PROOF even by GEICO that there is a correlation to being educated, or having a white collar job translates into ANY BETTER risk of driving negligently or having your car stolen or vandalized. LOSSES IN OF THEMSELVES DO NOT JUSTIFY USE. PLEASE GET IT THROUGH YOUR HEAD!
Mike,
My points were to add weight to the on-going underlying issues of how insurers can be unfair, and contingent profit driven, in the damaged property / claim settlement conduct trenches…