The Shocking Secret About How Your Car Insurance Rate Gets Set
Most drivers probably know that if they get into an accident, their insurance rates are also likely to take a hit. But a new analysis by Consumer Reports finds that your car insurance premiums are increasingly based on factors such as your credit score that are unrelated to your driving record.
How well you drive may actually have little connection to how much you pay for insurance, the consumer group found.
In a two-year investigation, Consumer Reports analyzed more than 2 billion insurance price quotes obtained from more than 700 insurers across the country. It found that in many states a bad credit history will drive up your insurance premiums more than a drunk driving conviction.
“What we found is that behind the rate quotes is a pricing process that judges you less on driving habits and increasingly on socioeconomic factors,” the consumer organization reports. “These include your credit history, whether you use department-store or bank credit cards, and even your TV provider. Those measures are then used in confidential and often confounding scoring algorithms.”
Consumer Reports says it found that most car insurance companies use about 30 elements of the nearly 130 available in a credit report to construct their own secret score for policyholders, and that credit scores could have more of an impact on premiums than any other factor. Drivers with the best credit scores were charged up to $526 less than similar drivers with only “good” scores, depending on where they lived. Only three states — California, Hawaii and Massachusetts — prohibit insurers from factoring in credit scores when setting prices.
Drivers are legally required to carry car insurance, but the lack of pricing transparency makes it harder for them to make informed decisions about which policy to buy. “Because insurance companies are under no obligation to tell you what score they have cooked up for you, you have no idea whether you have a halo over your head or a bull’s-eye on your back for a price increase,” Consumer Reports says.
Industry advertising that promotes special discounts, such as for bundling home and car insurance, only muddles the purchasing process because those special deals don’t actually save people much money, Consumer Reports found.
The organization says it’s high time for truth in car insurance, and it’s asking consumers to sign a petition demanding that insurers -- and the state regulators who oversee them -- use price-setting practices that are tied to more meaningful factors, like driving records. It is also asking consumers to tweet the National Association of Insurance Commissioners, @NAIC_News, and tell them to “Price me by how I drive, not by who you think I am! #FixCarInsurance.”
For more information on state-by-state insurance premiums, or to sign the Consumer Reports petition, go to ConsumerReports.org/FixCarinsurance.
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Maybe Don’t Count Out Obamacare Repeal Just Yet
Sen. Bill Cassidy (R-LA) told reporters on Friday that he’s getting close to securing enough votes to pass the last-ditch ACA repeal and replacement bill he’s put forth with Sens. Lindsey Graham (R-SC), Dean Heller (R-NV) and Ron Johnson (R-WI).
“I am pretty confident we’ll get there on the Republican side,” Cassidy said. “We’re probably at 48-49 [votes] and talking to two or three more.” And Senate Majority Leader Mitch McConnell has asked the Congressional Budget Office to estimate the effects of the Cassidy-Graham bill, which would speed up the scoring process.
Of course, those last two or three votes have been the challenge for the GOP all along, and they may not be any easier to round up this time. Sen. Rand Paul (R-KY), who voted for a prior repeal bill, said Friday that he won't support this one. Plus, opponents are already stepping up their criticisms about the effects of the bill. And time is running out: Cassidy and his colleagues only have until September 30 to pass the bill this year under a process that would require only 50 supporters in the Senate. So while the Obamacare repeal may still have life, it remains a longshot.
Orrin Hatch Signals Just How Complicated Tax Reform Will Be
GOP leaders said Wednesday that they'd issue a more detailed framework of their tax overhaul the week of September 25. But while lawmakers are eager to get more details about the outline being hashed out by the so-called Big Six team of negotiators, Republicans are still divided on key elements of the plan — going from blueprint to bill is bound to be a contentious process.
In his opening remarks at a Senate Finance Committee hearing today on individual tax reform, Sen. Orrin Hatch (R-UT) said the plan from the Big Six — of which he is one — "will not dictate the direction" the tax-writing committee takes. "Anyone with any experience with the Senate Finance Committee knows that we are not anyone’s rubber stamp," he said. "If a bill – particularly on something as consequential as tax reform – is going to pass in this committee, the members of the committee will have to be involved in putting it together."
Oh, and remember: Republicans also need to agree on a budget before they can push through tax reform without Democratic votes.
Aging Baby Boomers Drive Down the Uninsured Rate
About 10,000 boomers turn 65 every day, becoming eligible for Medicare on their birthdays. The Census Bureau says that the sheer number of boomers entering Medicare is affecting the uninsured rate for the whole population. That rate fell to 8.8 percent in 2016, down from 9.1 percent a year earlier, with most of the decline driven by the aging of the post-war generation. (Wall Street Journal)
Social Security Kept 26.1 Million Out of Poverty Last Year
Social Security kept more than 26 million people out of poverty last year, according to a new report from the Census Bureau. Refundable tax credits such as the one for earned income kept 8.2 million people out of poverty, while food stamps lifted 3.6 million above the line, housing subsidies reduced the number of poor people by 3.1 million and unemployment insurance kept 680,000 out of poverty. Overall, the Census Bureau reported, the poverty rate was 12.7 percent, while a more sophisticated alternative measure that factors in government programs for low-income families put the rate at 13.9 percent, down from 14.5 percent in 2015.
Read more about the new Census Bureau numbers here.
Tax Reform on Menu for Trump's Dinner with Dems
President Trump is set to host three moderate Democratic senators for dinner on Tuesday as part of his push for tax reform, Politico reports. The Democrats on the guest list: Sens. Joe Manchin of West Virginia, Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana, all of whom are up for reelection in 2018 in states Trump won last November. Vice President Mike Pence and GOP Sens. Orrin Hatch of Utah, John Thune of South Dakota and Pat Toomey of Pennsylvania are also slated to attend.