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The following is a guest post by Denver Burke. Enjoy!
Contributing Factor # 1 – Fraud
Contributing Factor # 2 – Rising Number of Motorists Without Insurance
Contributing Factor # 3 – Rising Number of Personal Injury Claims
Contributing Factor # 4 – New Legislation for Male vs. Female Insurance Premium Rates
Rates for women, particularly amongst younger drivers, are currently lower than those offered to men, as statistics show they are less likely to be involved in an accident. The change in law means that insurance for women will become more expensive to take into account the higher incidence of claims amongst men, whilst insurance for males is likely to drop slightly but not significantly.
Contributing Factor # 5 – Increase in the Cost of Fire and Theft Insurance
How about you all? Do you feel you are currently paying a fair price for car insurance? Have your premiums increased very much recently?
How do you feel about the issue of different genders being charged different prices across the board for various types of insurance? Do you think this is justified and fair or is discriminatory?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- Good article here! To me, it’s always interesting to examine the reasons (and possible reasons) behind pricing differentials and changes for commonly purchased things, like car insurance.
- In fact, in a post that I wrote several months ago, I looked at how car insurance rates varied based on age, gender, and geographic location.
- @ My hypotheses for why car insurance premiums may be increasing –
- Personally, I have several hypotheses for why car insurance premiums could be on the rise, assuming that the total number of road accident claims has not increased (as mentioned in the study mentioned above).
- Hypothesis # 1 – With the unfavorable world economy, many people that are running low on money possibly elect to stop their insurance coverage in order to pay for other living requirements. Since there is a smaller pool of insurers to spread the overall risk among, insurance premiums for the remaining insurance clients could be increased.
- Hypothesis # 2 – One of the primary ways that insurance companies work is that they take the small monthly premium payments from customers and invest the money in long and short term securities in order to make money. Since the interest rates on savings accounts are pretty abysmally low these days, the insurance money pool doesn’t grow as much, causing the company to tend to charge more in premiums from customers in order to make a profit and pay their expenses.
- @ The occurrence of fraudulent staged accidents – Personally, I have never heard of this happening. Do people really stage fake accidents in order to collect insurance? Anyone out there have experience with hearing of people doing this?
- @ Rising number of motorists without insurance – This factor makes a lot of sense to me. If someone else hits you who doesn’t have liability insurance, you and your insurance are stuck with paying the bill. This increases the amount that the car insurance company has to pay out, thus potentially increasing premiums for everyone.
- @ Offering similar auto insurance rates for men and women – The issue of whether or not men and women paying different insurance rates is justified is rather fascinating to me.
- As I found in the post mentioned above about how car insurance rates varied based on age, gender, and geographic location, it is clearly allowed by law in the United States to charge different rates based on gender.
- In doing some research while writing these comments, I found out that legally discriminating based on gender and age seems to be allowable in the insurance realm (includes health insurance, where women sometimes pay 50% more than men), while discrimination based on race, color, religion, or national origin are not allowed in the field.
- What is interesting to me is that discrimination based on age (well, as long as a person is of legal age) and gender is NOT allowed in most other realms of law – such as renting an apartment to a tenant or hiring for a job.
- Looking at this current landscape, it begs the question of WHY age and gender discrimination is allowed in the insurance realm?
- Of course, there is no one simple answer to this question, and I believe that this topic will continue to be debated for many years. But, it is interesting to think about nonetheless.
- So, I’ll leave this question up to you all. Do you have any thoughts for why this is?
***Photo courtesy of http://images.cdn.fotopedia.com/flickr-201099447-hd.jpg