Following the Competitive Enterprise Institute’s lead, the Consumer Federation of America today released its own ranking of state insurance environments.
Washington, D.C., April 24, 2008—Following the Competitive Enterprise Institute’s lead, the Consumer Federation of America today released its own ranking of state insurance environments.
“We need as much data as possible and I’m glad that CFA has done this,” said Competitive Enterprise Institute Senior Fellow Eli Lehrer. “But I don’t think much of this study’s methodology. Having the government hold down rates arbitrarily is not a good way to encourage road safety or, indeed, save consumers money,”
Lehrer says that CFA’s recommendations would send the country in the wrong direction. “CFA wants to replicate California’s broken automobile insurance system all over the country,” he says. “Apparently, CFA has overlooked the fact that California drivers pay some of the highest insurance rates in the country. Consumers in states that do not regulate rates—states like Illinois–actually pay less, on average, for insurance than consumers in California.”
Lehrer added that many states, including Massachusetts, have moved away from California-style government control in favor of freer competition. “CFA also wants states to mandate that private companies ignore legitimate risk factors in favor of having government bureaucrats decide what factors make drivers ‘safe’ and ‘unsafe,” he says.
Last month, in a study published in association with The Heartland Institute, Lehrer also ranked all 50 states on their insurances policies, assigning each a letter grade from A to F. The study found that the performance among the states varies widely, with states like Illinois, Idaho, Vermont scoring A grades and poor performers like California, Florida and Massachusetts receiving F grades.
Lehrer’s study, Property & Casualty Insurance: A state-by-state analysis of regulatory burden, is available online in PDF.
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