Consumers Oppose State Insurance Regulations That Encourage More Risky Driving and Help Wealthy Homeowners

Federal Charter Legislation May Alleviate Unfair State Insurance Regulations

WASHINGTON, June 20 -- A consumer survey released today found that 80 percent of drivers and 64 percent of homeowners surveyed disagreed with state regulations that make consumers pay higher insurance premiums so risky drivers and homeowners in high-risk coastal areas can receive lower insurance premiums. The "Consumer Opinions on Insurance Price Regulation" survey, commissioned by the American Consumer Institute, also found the majority of respondents do not believe state insurance regulations benefit consumers and believe that insurance regulations should be reduced.

"Consumers do not approve of policies that overcharge good drivers so that bad drivers can pay less, because they reward risky drivers and result in more accidents, higher insurance claims and traffic fatalities," said Steve Pociask, president of the Institute. "Consumers also do not want policies that give handouts to more affluent costal property owners at the expense of other, often less affluent, homeowners. It is critical that state regulators and policymakers terminate unfair price regulations."

The Institute's survey was released in anticipation of a new bill expected to be introduced in the U.S. House of Representatives by Ed Royce (R-CA), which would grant insurers the opportunity to operate under a unified federal regulatory system. An optional charter would minimize or eliminate costly state compliance requirements that are duplicative and inconsistent, and burden consumers with higher prices and unnecessary hassle. The House bill would mirror Senate Bill 40, the "National Insurance Act of 2007," introduced by Sens. Johnson (D-SD) and Sununu (R-NH) last month.

"We applaud Congress' efforts to modernize the insurance industry in a way that ensures efficiencies are streamlined, competition flourishes and consumers experience maximum benefits and protection," said Pociask. Other results of the Institute's poll concluded:

  -- 84 percent of respondents were unaware of cross-subsidies for
     homeowner's insurance that benefit coastal properties, and 64 percent
     disapproved of these policies.
  -- 60 percent of respondents were unaware of cross-subsidies for auto
     insurance that lower rates for bad drivers, and 80 percent disapproved
     of these policies.
  -- 72 percent of respondents believe that policymakers should not increase
     insurance regulations
  -- 51 percent of respondents believe state regulation does not benefit
     consumers, and only 23 percent believe state regulations do benefit
     consumers; and only 26 percent were unsure or did not know.

  American Consumer Institute

The American Consumer Institute Center for Citizen Research is an independent nonprofit educational and research organization devoted to improving the lives of American consumers by providing information on important issues that affect them. For a copy of the study or more information, visit http://www.aci-citizenresearch.org/.