I’ve heard this phrase in conjunction with various jurisdictions. New Jersey and possibly Massachusetts come to mind. I gather that the problem is that rates are really high and companies simply refuse to write policies in the state, or force policy applicants to go through elaborate application procedures before issuing policies.
Is this the “crisis,” or is there more to it?
At least in N.J., I believe that the “crisis” is seen as a perennial and major electoral issue. So . . . is there a single definition of the crisis? If so, what causes it? If people know what causes it, and the electorate cares about the issue, why doesn’t it ever get resolved?
Is it just that there are high rates of claims in “crisis” states? Certainly parts of N.J. are urban and gritty, but many other parts are affluent and full of, presumably, cautious SUV driving soccer moms. So is it instead rampant insurance fraud that is unique to these jurisdictions? Immigrant drivers with wacky notions of road safety?
Or is it a regulatory problem? If so, what regulations cause the problem, and why aren’t they changed?
I was always taught that insurance companies would write a policy (albeit at a possibly-hefty price) for pretty much any quantifiable risk. Even if risks are higher in “crisis” states, why would a carrier stop doing business there (as opposed to charging high rates with a decent profit margin, given that drivers have to buy a policy)?
I put this in GD because while there are no doubt factual and statistical features of the “crisis,” I suspect that various people may have divergent views of who (or what policy) is most to blame.
I was always taught that insurance companies would write a policy (albeit at a possibly-hefty price) for pretty much any quantifiable risk. Even if risks are higher in “crisis” states, why would a carrier stop doing business there (as opposed to charging high rates with a decent profit margin, given that drivers have to buy a policy)?
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I bolded part of your question because that’s the crux of the matter. The two states in question do not allow you to raise the rates enough to generate a profit margin within that state; they expect the profits from other states to shore up the “losses” in the crisis states. This was how it was explained to me by my wife’s insurance agent.
To what he said, I would add:
the People’s Republic of Massachusetts has declared that driving a car is a god-given right. To that end, auto insurance MUST be available to every driver…even if the guy has multiple accidents, DWI convictions, etc. Insurance compnies CANNOT compete on price…they MUST charge rates which are set by a state-appointed insurance commisioner. That is why the five largest auto insurance carriers DO NOT sell in MA!
Further to the mess, at least 80% of the legislature are lawyers-many of them in personal-injury practice! The law is that you must have at least $2000.00 worth ofpersonal injuries before you can file a lawsuit against another driver…and your friendly lawyer will happily steer you to a chiroquactor , to be sre you qualify!
Because of this (na, I’m just cynical) Massachusetts has the HIGHEST casualty claims rate in the USA! My insrance went up 27% this year,but the legislature thinks things are just fine!
I’ve written the state AG, but he is too busy worrying about gay marriage…damn, this state SUCKS! :eek: