Democrats versus Republicans

[sailaway21]

What a maroon!

Not surprisingly, you missed the point the Beezer was making.

If the government mandates that we all wear our seatbelts, what incentive is there for the insurance companies to lower rates? On the other hand, if it's a voluntary action on the part of the policy holder the insurance company can offer an incentive to do so. How? They could offer either an increase in compensation or a premium refund if you were involved in an accident while wearing a seatbelt as certified by the officer investigating.

heck, it'd be worthwhile purchasing an electronic device that showed the vehicle had never moved without the occupant being buckled up. Show it to your insurer and you get a discount.

On the other hand, if the government mandates it, there's just a reason for the insurance company to deny you all coverage as if you were drunk, you're similarly in violation of the law.

The seatbelt law did not lower premiums, it increased insurance company profits through no effort of their own. And I'm pretty sure I know how you view insurance company profits.....

Econ. 101

[PBzeer]

You have more patience than I Sway, as I have given up explaining what craig either deliberately overlooks, or is unable to comprehend.

[craigimass]

Originally Posted by sailaway21

What a maroon!

Not surprisingly, you missed the point the Beezer was making.

If the government mandates that we all wear our seatbelts, what incentive is there for the insurance companies to lower rates? On the other hand, if it's a voluntary action on the part of the policy holder the insurance company can offer an incentive to do so.

We agree 100% on the idea of having safety devices that work. I was worried there for a moment!

As to voluntary, that is a tough one...unless, as you say, we install some kind of device that makes it clear whether a seat belt is fastened all the time and then transmit that data to an insurance company.

But tell me again...what does not work about the current system?

Oh, yeah, insurance companies have no reason to lower rates?

Well, being as my SIL is a big time fancy insurance actuary, I have put the question to him. The answer is actually quite simple....well, maybe not simply enough!

COMPETITION......

That's the easy button, for sure! If insurance was provided by one company with ultimate greed then your point might make some sense. But it isn't. Furthermore, some insurance (not as much in the car biz) is provided by companies which are OWNED BY THE PEOPLE WHO HAVE POLICIES. They work on a communist cost-plus ideal - that is, they take the actuarial tables and the real world experience and add enough profit to keep the insurance company going.

In our commonwealth we have (big bad) regulation which sets a lot of the prices of car insurance. As with electricity and nat gas, etc. they cannot charge whatever they want.

There may be points you can make in relation to free market forces, but allowing people to maim themselves and become a burden on others may not be the "right" one.

[sailaway21]

Now that our Massachusetts correspondent is up to speed, or at least where everyone else was a couple of pages ago, he might consider the the factors involved in state coerced actions versus voluntary actions based upon market incentives.

When the state mandates certain driving behaviors it does not have the same effect as the customer doing the same behavior on their own for either economic reasons or safety reasons.

A couple of examples might be in order. The several states lowered their speed limits from 70 mph to 55 mph in the 1970's in pursuit of lowering the consumption of petroleum. They did that somewhat but then kept the speed limit of 55 mph on, long after the price of oil had dropped precipitously, in the quest for greater highway safety. Of course the insurance companies were all for the policy. While it did nothing for highway safety, the deaths per vehicle mile driven having declined every year since statistics have been kept, it did line the pockets of the insurance companies by making vast numbers of drivers "unsafe" drivers in a statistical sense. Those pesky drivers had the notion that they were doing nothing unsafe or economically unsound by driving at 70 mph on roads where the limit was 55 mph. And given that the previous limit on those roads had been 70 mph, they had much to recommend their theory. Unfortunately the several states did not see that their drivers were voting with their right foot and persisted in ticketing those drivers for their actions. This placed a large number of drivers, in some states the largest single group of drivers, in the insurance category of "assigned risk". Assigned risk meant that the drivers were a poor insurance risk based upon driving habits and therefore required to pay an insurance premium for the privilege of driving, above and beyond what "safe" drivers paid. We created a nation of speed limit violators and the insurance companies thought nothing of it, at least in those states where insurance was privately offered. In New Jersey, where assigned risk is run by the state, the fund went bankrupt even though virtually the entire state's drivers were in it.

Similarly, one may be ticketed for not wearing one's seat belt and will face increased insurance costs even though it may have well been a one-time incident by a driver whom otherwise religiously wears his belt and has never had an accident nor an insurance claim. It takes years of ticket free driving to get out of assigned risk by the way.

Now your argument that we all assume the burden for injured drivers may have some merit to it but the fact of the matter is that, with state control and state mandates, the safe driver is never allowed to reap the benefits of his or her safe driving. They pay the "market rate" but that market rate is a skewed market rate that does not address the individual's own driving record. this can be quite easily ascertained by examining the insurance rates between adjacent states where one is a no-fault state and the other is an at-fault state. The no fault states have uniformly higher premiums for the same driving record as their adjacent states that do not have such a policy. And the insurance companies assured us that no-fault would lower premiums. It has done nothing of the sort.

Your example of regulating auto insurance a we do public utilities is similarly flawed and it might do to revisit the idea of regulating public utilities or having them in the first place. Sure you can assign a modest profit to them over their costs and everyone feels fine about it. but that does nothing to address the fact that their costs are completely out of line with the services they provide. There is zero incentive for those utilities to become more efficient or to trim fat. and you might have noticed that they now will make absolutely no move to create more energy supplies unless they are fully compensated in advance by rate increases. It was thus that we paid for nuclear power plants that have never delivered a kilowatt of power to the consumer. Insurance companies are quite happy to receive a flat rate profit on their investment, it frees up staff to find ways to limit or deny coverage instead of engaging in actual competition.

There is some competition in auto insurance, certainly an embarrassment of competition when compared to the non-competition existing in the medical insurance businesses, but nothing like what the safe driver should receive in terms of benefits from that safe driving.

The current trend among insurance companies to maximize profits on drivers is to help the state to legislate more drivers into assigned risk and other higher premium yielding categories. In many states you cannot get insurance to cover your car that sits in the garage nine months a year without carrying full coverage on it. that's just another way that the insurance companies lobbied the states to change the insurance law because of a couple of incidents where someone drove an uninsured car.

It's far easier to reap profits with the imprimatur of the state's sanction than it is to use actual actuarial tables based upon individual driving histories. The actuarial tables remain the same, the state just changes how the insurance company is able to interpret them. Thus you now see a fifty year old man placed in assigned risk for a single incident involving alcohol for a period now ranging from four to seven years. It does not enter into the calculation that the man may well have an over thirty year history of no alcohol related violations, that one incident places him in assigned risk. And, if you examine the way that insurance driving points work (they're generally different than the state's driving license points) you will see that all that man has to do is pick up a simple speeding ticket once every three years and he will never get out of assigned risk.

Corporations, and insurance companies are largely corporations, have little interest in competition or improving their product. They have far more interest in protecting their market and market share. thus they spend far more time lobbying Washington and the various state governments in pursuit of their "stability" than they do in competing in an open market.

To think otherwise is to ignore the example of telephone services and the recent deregulation of the cable TV markets. Even there the corporations endeavor to limit the competition as much as they can instead of offering more for less to the consumer as competition would require.

It's seductive to regulate things but the market does a far better job of doing so when allowed to work, something uncommon in these days.

[craigimass]

Lots of words, but do they translate....in the EXACT same type of situation you are talking about?

"Based on studies of the effects of states' enactment, repeal, or weakening of universal helmet laws, use approached 100 percent when all motorcyclists were required to wear helmets, compared with about 50 percent when there was no helmet law or a law applying only to some riders"

Hmmm..that big bad government regulation once again smoked out your "people are rational" ideals.

As to the result:
"Death rates were lowest in states with helmet laws that cover all riders"
"Kentucky repealed its universal helmet law in 1998, followed by Louisiana in 1999. These actions resulted in lower helmet use, and quickly increased motorcyclist deaths in these states by 50 percent and 100 percent, respectively"

Wow, lots of dead people! And we are not even talking about the walking wounded. Once again, PRICE seems to be the major point in the entire rant about car insurance above.

My ideals are based in QUALITY OF LIFE and SAFETY. These two things do not always meet with PRICE, despite some ideologues imagining that they do.

As to the price of car insurance, I am used to fairly high rates having lived in Philly and NJ. In NJ there is little softening (regulation) of the rates - meaning that if you end up having an accident or two, you might as well quit your job because you will not be able to afford $500 or even $800 a month for car insurance. In Ma, however, the pool is a bit more reasonable...at least to me. You do get hit if you have an accident, but your rates do not triple or quadruple or worse. Being a good driver, my rates have gone lower and lower and I consider them very reasonable...at least compared to other things in my life.

And, in the end, that is all I care about. Whether it is regulated or not, or whether the insurance company makes 5% or 50% is of little interest to me. I just don't want to have to micromanage my entire life too much.

Insurance, by definition, is shared risk...or Socialism in your terms. The person who has an accident which causes $200,000 in property and medical bills (very common, actually) could NEVER pay enough premiums to offset that cost and risk. So, we communists decide to institute shared risk...regulation...and insurance in order to come up with a compromise we all can live with.

It really does beat the law of the jungle, IMHO.

[ssneade]

i cannot believe craig actually said something i agree with. sure, i remember standing up in the back seat while dad was driving. i also remember operating a motorcycle w/o a helmet, but times have changed. there is a helluva lot more iron on the roads these days, and most people operating said iron seem to be too busy with cell phones, their radio, makeup or any number of distractions to concentrate on the job of safe vehicle operation. the highways and byways of this country are for public use, but not many folks have respect for the other guy any longer. i guess the only way to make the roads safer is tougher regulations.

it's hard for me to say that, being as i champion the theory of maximum personal freedom with minimum government involvement.

craig, i still think you're a bed wetting liberal, but i gotta concede that one.......

[sailaway21]

The last thing Craig's ideas are based on is "quality of life", except in the cases where he deems it necessary for someone to terminate someone else's poor quality of life, but in the regulation of life.

When he get's around to discovering how much it cost to fix those motorcyclists whom didn't die in their accidents, he's going to experience yet more cognitive dissonance on his point that old people hang on too long, costing us to much money in medical expenses for only less than a year more of life.

Ya gotta be nimble living on the slippery slope of government regulation.

[PBzeer]

Unhealthy lifestyle choices lead to far greater burdens on society than do automobiles. And already we hear the faint rumblings of the need to protect us from unhealthy choices. If it is the government's function to protect us from the burdens we place on society for not wearing a seatbelt, don't they have just as much cause to criminalize french fries? Shouldn't they force us to get X amount of exercise each day? After all, it will mitigate the burden we place upon society by making unhealthy choices.

[ssneade]

lets not forget the electronics world. would rca not be liable for my high blood pressure because i chose to sit on my ass in the evenings instead of engaging in an activity to help circulation?

sorry, i draw the line on highway regs. for the rest if it, the government can stay the @uck out of my life.

but as long as there are meddlesome libs, they will always be trying to do something else to control us and slowly, but surely squeeze the freedoms guaranteed us by our forefathers from our lives until we become good little government subjects.

soon, i won't be able to raise my own crops, because that would be interfering with interstate commerce. i won't be able to raise my own pigs, chickens and cattle, unless they are federally inspected and the killing of said livestock would be deemed "cruelty to animals". i will have to watch out how much water i'm drawing from my own well. the children will soon be grown and i'll have a house too large to be a two person dwelling, and certainly don't need ten acres of land. shouldn't be allowed to own a boat of its size because other people who earn the same salary as me can't afford one. do you see where all this is leading?????

[PBzeer]

Well, if highway regs are okay, then shouldn't we lower the speed limit to .... say 10mph? Think how many lives and injuries (thusly, less burden to society) it would prevent.

The point is, as well meant, and benevolent that seatbelt regs are, had the insurance companies offered the incentive, the consumer would have adopted them (most, but certainly not all consumers) and demanded seatbelts, airbags, etc from the car makers, without government intervention.