Vic
Elite Member
- Jun 12, 2001
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Mistakes in this thread:
1. The OP's premise assumes that direct marketing costs less than sales agents paid on commission. Despite all of the claims that direct marketing would have you believe, that is not true. What direct marketing does do is provide a higher return to the corporate entity if it is successful.
2. You are not required to purchase auto insurance in order to drive a car. You could also place a legal bond in escrow for an amount determined by your state.
1. The OP's premise assumes that direct marketing costs less than sales agents paid on commission. Despite all of the claims that direct marketing would have you believe, that is not true. What direct marketing does do is provide a higher return to the corporate entity if it is successful.
2. You are not required to purchase auto insurance in order to drive a car. You could also place a legal bond in escrow for an amount determined by your state.
Only five states do not require a minimum liability insurance, and all of those require uninsured motorist coverage. An exception is Florida, which only requires property damage liability.
Vic
Elite Member
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To my knowledge, all those states allow a driver to waive purchasing a minimum liability insurance policy so long as they post a bond for an appropriate amount in escrow. Essentially the driver self-insures himself. What part about this do you not understand?
No one does this, however, because the ROI on an escrow is zero, whereas the ROI on insurance is so good as to be practically a sure thing.
There part where I can't find any information about this, I've never heard of it, and you haven't provided any credible source.
I think insurance is a scam... why else can quotes vary from, in my case, $450 to $2700 per six months for the EXACT SAME VARIABLES.
BTW Geico was the 2700/6 mo company. State Farm was the 450/6 mo.
BTW Geico was the 2700/6 mo company. State Farm was the 450/6 mo.
because each company is filed within each state differently with different price points and rates and discounts.
That may be... but 600% variation?? That's just absurdly ridiculous. It gives me the impression that the insurance companies can gouge as much as they wish, and with the secrecy behind how they form their rates... they can get away with it. I mean, anything else I get quotes on... the quotes are generally similar. CD rates at banks aren't 600% apart. Gas prices in town aren't. Estimates I got to repair my collision-damaged car were within 15% of each other. Even my homeowners insurance... all the quotes were within $50 of each other. But CAR insurance? Good grief.
Vic
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I called Geico, it was going to cost a few hundred more than my current Allstate policy. That's for a six month period, so it would be $600.00 or more extra every year if I went with them.
dullard
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- May 21, 2001
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Sometimes Geico/Progressive costs more, sometimes it costs less. I agree with Vic.
1) You are forgetting the massive cost for them to run every other ad on TV.
2) Costs to the business don't directly impact the price of the goods/services they sell. Suppose you ran a business. Suppose you can sell a product which is as good as or better than the competition. Answer this question, why would you sell that good/service for far less than the competition? If you could legitimately earn more profit by selling it near the price of the compeition, wouldn't you? Did you notice that you could answer those questions WITHOUT even discussing the cost to you for providing that good/service?
1) You are forgetting the massive cost for them to run every other ad on TV.
2) Costs to the business don't directly impact the price of the goods/services they sell. Suppose you ran a business. Suppose you can sell a product which is as good as or better than the competition. Answer this question, why would you sell that good/service for far less than the competition? If you could legitimately earn more profit by selling it near the price of the compeition, wouldn't you? Did you notice that you could answer those questions WITHOUT even discussing the cost to you for providing that good/service?
Vic
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No, the issue is that no one does it because (except in rare circumstances) self-insuring makes no financial sense whatsoever.
Consider: you could (for example) pay $1200/year for $100k coverage (which would be a reasonably expensive policy FYI), or you could self-insure by placing a $100k bond in escrow. Now you have a $100k claim (a single relatively serious accident these days). It would take 83.3 years at $1200/year to pay the $100k, but you're under no obligation to do so (you made your premiums). You could even move your policy to a cheaper insurer (should you find one) and you could expect your premiums to be be effect for only 3 years following the accident. Or you have to pay the $100k in full if you self-insured, plus place another $100k bond to re-self-insure. Now... which way makes more financial sense?
So... someone was ranting that insurance is a "legal scam"... perhaps you would care to elaborate on that?
If you look through the tread you will see that the complaint is that it is compulsory, which allows the insurance industry to cooperate in raping the consumer.
Vic
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I agree that it shouldn't be compulsory, and I remember working to fight that law when it passed in WA state in the early '90s. IMO it's like not wearing your seatbelts -- stupid should hurt, and government shouldn't try to protect people from hurting themselves. However, even a cursory analysis shows that competition is stronger than ever in the industry and that insurance rates are not "raping" the consumer. If anything, given the almost outrageous cost of claims these days, auto insurance is a better deal to the consumer (statistically) than ever.
The fact is: insurance is the actual cost of the risk of driving an automobile on public roads, pooled and averaged out. Actual raping would occur if consumers were not able to pool and average out that risk cost, and instead had to pay out claims as they were incurred.
That's far too simplistic. It's the cost of all of the paid claims, plus the cost to run the industry, including lobbying. I'd even wager that not one auto insurance conglomerate is in the red in any state where it is compulsory.
Maybe we've gone off on a tangent here regarding the OP...
Do you really believe that garbage you wrote? Auto insurance is only mandated for certain aspects of an insurance policy. In FL PIP (no fault) and property damage (damage to someone elses car). Heck, not even liability is mandatory in FL.
In most states liability is mandatory. I wonder why this is???????????? Hmmm could it be because most people would not be financially responsible and pay for damages / injuries they cause if they drove like a retard? Hmmmm... what a racket.
Rates are always filed with the state and are based on claims / costs of doing business and MUST be approved by the state dept of insurance.
I switched from Geico (which is Gecko-ese for "rip you off") over 6 years ago, when my Farmer's agent was able to give me better coverage for 1/2 the price! :shocked:
I checked Progressive this year, on a whim, and while they could barely beat Farmers for similar coverage for 6 months, it was only because of a special $50 "rebate" they offered (my guess is, to entice people to switch) for new customers. After 6 months, if they didn't continue to offer that rebate, I'd end up paying more.
Of course, it helps having a buddy who's a Farmer's agent!
I checked Progressive this year, on a whim, and while they could barely beat Farmers for similar coverage for 6 months, it was only because of a special $50 "rebate" they offered (my guess is, to entice people to switch) for new customers. After 6 months, if they didn't continue to offer that rebate, I'd end up paying more.
Of course, it helps having a buddy who's a Farmer's agent!
Vic
Elite Member
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Wrong. Premiums barely even cover the claims. Insurance companies pay their costs, pay for their lobbying, and make their profits the same way banks do -- on the margin.
Talk to the states about the compulsory aspect. Those laws passed with overwhelming popular support.
I believe most people support cumpulsory auto insurance, so I agree with you about that.
But the real issue people should be aware of, is that insurance companies have way too much influence in the regulation of their industries by state and federal law. Many of these regulations are beneficial to the industry at the expense of everyone else.
The same thing is true of many other industries, but because the average person doesn't understand how insurance really works, it's easier for this industry to manipulate the playing field to their advantage, by affecting the very regulations that should be protecting consumers.
Things like letting insurance companies cherry-pick who they will cover, for example.
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