An interesting piece by Bruce Mohl in the Globe Saturday that could do with a bit more discussion:
Governor Deval L. Patrick’s new consumer affairs chief yesterday launched a study group whose goal is to report by mid-March on ways to cut costs and increase competition within the state’s heavily regulated auto insurance system.
The piece continues, “Massachusetts is the only state in the nation where regulators set all auto insurance rates.” It adds, “Auto insurance has been the focus of an intense industry struggle over the past several years, with many of the state’s carriers pushing for a system in which companies would be able to set their own rates. Former Governor Mitt Romney supported competitive rate-setting, but his administration made little headway against Commerce Insurance of Webster and Arbella Mutual Insurance of Quincy, which generally opposed change.”
My question is: why regulate auto insurance prices at all, provided there is market competition (which there is in other states, and even to some degree in the Commonwealth)? It’s not like owning a car is a basic human right.
I always thought it was so that we don’t have to worry about whether we’re getting a fair deal for our insurance. We just go to some convenient insurance agent, get the insurance you need, and pay the amount they say you have to pay. There’s no shopping around, which sucks. We already did that to buy the damn car, now we have to do it to get it on the road? No way. Charge me what it costs to insure me. If I here that one company offers better service, I might go out of may to choose that company, and I might avoid companies with reputations for bad service, but if I have to factor in the cost, too, then how am I supposed to weigh the cost of a reputation for bad service, etc.
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Regulate insurance so that we pay what everyone else with our record and our car pays. And smooth out the difference between neighborhoods, since we’d all be happy to trade houses with anybody in Wellesley if they don’t like it.
You are way off on this.
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Insurance rates are regulated to try and socialize the costs of insurance. Traditionally insurance rates are set by your driving record, the type of car and the theft and accident rate in the town you live in (I know there are some other factors but these are the basic ones that are responsible for most of the cost). In Mass two of these still apply, your driving record and the type of car (more importantly the theft rate of that car). But the reason for regulated prices in Mass has to do with the last one, the theft and accident rate in the town you live in.
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If we had a free market system, it would cost much more to insure a car in Boston then in say Newton. Boston has a higher accident rate, mostly due to the commuters and schools, and a higher theft rate. The reason I say this is a socialized form of insurance is because what the system does is sets the rate for Boston lower then a free market system would have. In order to do this the system then increases rates in the surrounding towns, Milton, Quincy, Braintree, Newton, etc.
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I am not sure which towns exactly which towns have lower then market rates and which have higher then market rates. But an example from my life, my wife and I bought a house in Randolph about 4 years ago. At that time, Randolph was not one of the towns that contribute to Boston or only contributed a very small amount. About 2 years ago they redid the rates, now none of the tradition factors in Randolph had change, i.e. crime rate, from the previous rate setting year. My insurance on a cheap Ford Tempo that I kept as a commuter car increased by over $200 per year. I was pissed, I hadn’t got into any accidents and I hadn’t received any speeding tickets. Why did it go up?
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I called my insurance agent, Commerce was the company, and she looked into a couple of other companies to see if the rate would be any cheaper. They were all within a couple of dollars. So I looked into it a little bit more and found out that Randolph had been reclassified to carry some (more) of Boston’s burden.
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As far as Arbella and Commerce, why would they want to change the system? The are the only big companies in the market, State Farm, Gieko, etc. won’t offer insurance in Mass because of the fixed rate. And if people have them and feel like they are not getting a fair deal, they call around and everyone else’s rates are the same. There would be little motivation to switch to a smaller company.
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One last thing, for your question “how am I supposed to weigh the cost of a reputation for bad service, etc.” It’s called being a good consumer!! There are plenty of websites, news letters, consumer reports, etc. where this information is available. Stop being so lazy.
You are mostly on the money with your analysis, except where you say this:
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The town you live in still affects your insurance rates significantly. I live in Springfield; if I moved to Agawam, I would probably see my insurance get cut in half.
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Personally, I think this is a flawed way of setting rates. City boundaries are somewhat arbitrary — there is a street in Springfield where one side is in Springfield, the other side is in East Longmeadow. People on one side of the street pay a lot more for simply living on the wrong side of the street. Not $10-20 more — hundreds of dollars more.
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I am perfectly fine with the state regulating insurance, because the state is mandating insurance — in other words, it is providing the insurance industry with customers. I think that the state benefits from insurance policies that provide for the greatest social good. In an unregulated market, an insurer may simply decline to offer you coverage based on who you are or where you live — not based on your actions.
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That said, I think that the system needs some tweaking.
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The way insurance works in this state, you start at Step 15. Each step above or below 15 results in a 7% effect on the 3 compulsory rates and a 5% effect on collision premiums. If you’ve been driving for 6+ years with no incidents, you will be at a step 9, meaning that you will save 42% from step 15. Many drivers fall into this category.
If you get a speeding ticket, you get reset to step 15 (you’re now at 0 years of safe driving) and you get 2 more steps added to your record for 3 years. You immediately jump to a step 17. That means your insurance immediately goes up by 56%!. So if you’re like me, and are paying $1,800 (I’m at step 9 — that’s just how much insurance costs in Springfield), your insurance immediately goes up by $1,000 for a single speeding ticket, and it stays above-average for SIX YEARS.
So one speeding ticket would cost me somewhere near $3,500 in added insurance. That’s disgusting, and it’s hardly representative of the “threat” that I pose as someone caught speeding (I am confident that no driver has never sped). It is also disincentive for cities and towns to enforce speeding laws, because it bankrupts their residents, especially poorer residents (try telling someone struggling in a $8/hour job that their insurance will now cost them $1,000 more per year — 6.25% more of their yearly income).
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I do not think that this state should follow the deregulatory trends of other states. Other states use data not related to driving to set your insurance rates. Are you divorced? Higher rate. Do you choose to remain childless? Higher rate. Miss payment on a mortgage? Higher rate.
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Insurance is about socialism. We all pay more so that in the event one of us gets into an accident, the pool covers the costs. When insurance companies expend their effort trying to figure out who to cut free due to their data mining, that just drives up the overall cost in the pool because they’re spending money to play hot potato with customers.
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How do we lower the cost of insurance in this state? Not by “competition that will ensue from degregulation” — the insurance companies currently not writing in this state are doing so because rates are not high enough for them, not because they are too high. I don’t doubt that some people would see lower bills under deregulation, but people who are already disadvantaged would see higher bills — people with bad credit, renting in the wrong neighborhood, etc.
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No, we can lower the cost by cutting down our accidents. I couldn’t find the citation, but I read last year that Massachusetts ranks #3, behind DC and Rhode Island, in the country, for auto accidents, and the rate is more than double the #4 or #5 position. That would seem to be driving the costs in this state.
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We can also lower the cost by increasing seat belt usage. Massachusetts ranks #49 in seat belt usage in the country. That’s awful, and we have only ourselves to thank.
The cost to the insurer is a function not of your driving record, but the liklihood that you are going to make a claim. The driving record is but one of many factors that play into this. Credit scores, living arrangements, and a host of other information are perfectly sound actuarial methods of predicting the risk of a claim.
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If you continually park your car in a spot where the window gets smashed, you should pay a higher rate, even if the claim doesn’t affect your driving record.
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And if you don’t like how your premium is priced, you can shop around.
You’re talking about the cost to the insurer, not the cost to the pool. Why should the state facilitate lowering the costs of insurers when that simply means taking money from some people in the pool based on who they are and shifting it to others?
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The focus should be on the pool, not the insurers. Allowing the insurers to charge some people more so that they can charge others less gets away from the basic concept of insurance, and it has no benefit to the average insured person — it only has a benefit on those lucky to belong to a group deemed “less of a risk”.
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Can you tell me how the timeliness of a mortgage payment affects your driving?
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If you can only afford to live in a neighborhood where it has a higher risk of being smashed, that says more about our society than it does about the person parking the car.
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If you’re so keen on these “sound actuarial methods”, then should I expect that you will argue that race should be allowed to set rates? If not, why not?
You’re right, I meant the pool. And charging some more so that others can be charged less is exactly why people are a little less than satisfied with the present system except that the lucky few are the high risk drivers, who are not required to bear the cost of their own liklihood of claims against the pool.
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I’m not an actuary, so I can’t answer with certainty, but any insurer that wants to exist over the long term must be extremely skilled at assessing risk. That is how they can price premiums competitively in order to get customers. If they overprice, the customers go elsewhere. If they underproce, they lose money on claims. These other factors are probably indicators of instability rather than race, and are probably decent predictors of the liklihood of a claim. If they allow the insurer to more accurately assess the risk of a claim, bully for the insurer.
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As for race, I don’t really see its relevance. In the other states that I have lived, (NY, TX) they don’t ask, and I believe that the question is prohibited by the standard anti-discrimination laws. So it isn’t even available for use as a criterion. That doesn’t mean that other information should for some unspecified ideological reason be off limits.
I don’t think I agree with the concept that the way insurance companies should make money is by being adept at assessing risk. Assessing risk to costs between drivers around does nothing for the pool unless the factors are based on direct, concrete behavior.
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I agree that in an unregulated marketplace this would be the correct business plan, but in a regulated marketplace, where each company could only use certain allowable factors, companies could spend less time on data mining and more time on improving the efficiency of their operations, or, better yet, by waging campaigns to alter driving behavior and conditions.
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Do you really want to give insurance companies carte blanche on identifying risk for an driving, an activity that is virtually mandatory in our society? Do you want to run the risk that the insurance industry might decide that something about you makes you an “increased risk”, and therefore you pay much, much more?
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Are you in favor of genetic testing for health or life insurance rates? Same thing — risk assessment.
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I brought up race because in theory, a company could use it — along with anything else — to determine someone’s “risk”. Race IS prohibited because of anti-discrimination laws. But nothing else (to my knowledge) is.
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What if insurance companies decided that your voter party affiliation was a good predictor? If you’re a registered Democrat, you would pay more in rates. It’s not so far-fetched — they say that if you lock your keys in your car and you call AAA, you get higher rates.
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To me, this fight focuses on whether you think that correlation factors instead of causation factors should be used to determine auto insurance rates. If you drive badly, this causes you to have insurance claims. But if you pay your mortgage late occasionally, this MIGHT indicate some unknown trait that MIGHT also cause you to drive badly in some way. (Republicans often define that trait in moral terms, such as “lazy, careless, selfish”, etc.)
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I’m perfectly OK with direct behavior being used to set rates — but again, not too much, because once you decide that certain people should be excluded from being allowed to drive, the fight then becomes about ratcheting that bar lower and lower, excluding more people. Today it’s drunk drivers. Tomorrow it’s teens. The day after it’s senior citizens.
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Why not just create a system where you get only one claim, and then your insurance goes to $50,000 per year? That would surely stop people from getting into accidents, right?
If Insurance Company A decides to hike my rates because I am a registered Democrat, I could switch my business to Company B, that makes no such absurd contention. Company B does this because my money is green, and they would like to convince me to hire them. It is the nature of the service sector: its customer service!
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Finding more granular tools than accidents in the last X years is customer service because it finds way to make insurance cheaper for the best drivers– those least likely to make a claim. If that makes insurance more expensive for others, so be it.
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What it boils down to is that you are morally uncomfortbale with any system that does not heavily subsidize the cost of car ownership for urban drivers.
Insurance companies have an anti-trust exemption. What’s to stop all of them from colluding? What if it turns out that Democrats are actually slightly more prone to accidents? Without regulation, they can do what they want.
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I am morally uncomfortable with the basic concept of assigning risk based on correlated factors, factors that are not related to the activity being insured. For those comfortable with such a practice, I’m curious, what would your objection be to race/ethnicity/gender/sexual preference being used too?
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By the way, based on my demographics, I suspect my insurance would go down substantially with “reform”. I just think that the damage to my city, and ultimately to this state, would go up substantially. Although who knows — maybe the high insurance rates for certain urban drivers will make it more cost-likely for them to live in suburban areas…
I believe that the exemption to which you refer applies only to federal, beacuse of an old precedent that insurance is not interstate commerce, and is therefore not subject to federal regulation.
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That would leave the state anti-trust laws to bar the collusion which you seem to fear.
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BTW, what we have now is worse than collusion: someone other than me informs me what I am allowed to buy and from whom, and what I will be required to pay. If there is no ability to compete on price, is it any wonder that dealing with Commerce is like dealing with the RMV?
I can agree with you that the price regulation is bad. I am in favor of scrapping the whole rate-setting thing. However, I think that it is to the state’s advantage to set the basic rules under which the insurance can be calculated, which factors should be used and how much weight to give to them, etc., and then let the companies decide among themselves who can offer the product for the lowest price.
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I don’t like the idea of the insurance companies being allowed to define the product, because they will define it in a way that is contrary to the basic goals of society in our state — i.e. teens and seniors not being able to afford to drive, etc.
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If you want to live under such a plan, then let the state get out of it completely, and don’t require anyone to buy insurance if they don’t want to.
THEY are the only ones to get a discount – a hefty 25% – REGARDLESS of driving record! That’s right, a 66 yr. old with two drunk driving offenses will pay the same price as a 19 yr. old high school valedictorian with a perfect record! We don’t even do away with the 25% for seniors for those convicted of VEHICULAR HOMICIDE!
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Think that’s a hypothetical? In Masshpee, one Monica Mullally killed a person while in her 20’s. Served 3 years, got out, got her license back. Killed ANOTHER person in her 30’s. WHEN SHE TURNS 65, she’ll get 25% off! And don’t get me STARTED on Joan Kennedy!
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(And yes, a bill WAS filed to correct this, and never got out of the Insurance Committee – who apparently want seniors to vote for them, even if it means driving into the polling place because they confused the gas and brake…)
We are less in disagreement than I thought.
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I just disagree about the factors.
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As for seniors and teens, the seniors already get all kinds of discounts, and the fewer teens driving, the better.
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They can wait until their brain works. 21 maybe.
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And they can get off my lawn!
If you had a perfect record, you’d be at a Step 9. If you got a ticket, you’d get two negative points – which would put you at a Step 11. You WOULD lost all those Step 9 perfect discounts – but you haven’t been set back to Zero – or Step 15 – for almost 20 years!
It’s not old. I’m looking at my 2004-2005 policy and I am listed as “SDIP credit step 09”. I remember reading that they were talking about changing it this year, but I doubt the change, if it occurred, was dramatic.
But the dramatic chanc PP refers to happened quite some time ago. In other words, if you got a ticket under that 04-05 policy, your number would be 9+2=11, not reset to 15+2=17.
I originally used this source, but it appears a bit out-of-date:
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http://www.speedingt…
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Here’s another source:
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http://www.dmv.org/m…
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By the way, a fender-bender is enough to get you a 4-point charge, because $2,000 comes quickly on today’s SUVs.
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Note the Republican spin there… — whoops, this is a private site, I thought it was a state site.
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That implies that the basic concept is there, but the numbers have changed. It seems as though now, if you get 1 ticket, you’re OK, but on the second ticket you get a 30% surcharge for 3 years, plus you lose your 17% discount for six years (but 7% returns in 5 years).
I seem to recall, as I was paying the bill this year, that the “safeness” number was on a new and different scale.
Yes, the step system has been changed to a new point system where all drivers start at zero and have surcharges added for infractions.
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This seems to replace the former situation where customers started out with a middle, “neutral” ranking, from which their ranking can improve or deteriorate, with one where they start with the best ranking, which can only deteriorate.
From what I read, they just subtracted 15 from everyone’s SDIP rating, and changed the section that was “good driver” territory to be outside the rating.
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In other words, nothing really changed except the way it is portrayed. You now start with 0, you get points for infractions, and if you have 5+ years of good driving, you qualify for additional discounts.
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That means that one small accident or two tickets jacks you up 30% (from the points) and another 17% (from the loss of discount). It doesn’t return to normal for six years, you pay 47% more for the first few years, then it gradually drops so you’re paying no extra after 5 or 6 years.
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Also, people who move here pay 17% extra for their insurance because safe driving records can’t be transferred from other states.
After moving back from Texas.
…they have to be transmitted electronically to the RMV, instead of the old written transcripts, but most agents don’t bother. It’s a hasssle for less comission.
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Please note – they have NO trouble finding out of state accidents and drunk driving!
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BTW – did you know your Rep. can help you with this via the RMV legislative liason?
in 1999. Alas, water under the bridge.
“But the reason for regulated prices in Mass has to do with the last one, the theft and accident rate in the town you live in.”
When I moved from Medfield to Malden, my insurance rate skyrocketed. They (Commerce Insurance) told me it was because of the zip code change
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“As far as Arbella and Commerce, why would they want to change the system? The are the only big companies in the market”
A couple years ago I was interviewing at Arbella and they said they were number 3. I didn’t ask who the 1st and 2nd were.
I visited this site (http://www.mass.gov/…)
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According to the information here, Malden is Territory 14 and Medford is Territory 12. Boston is territory 27.
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“There are many factors that contribute to the cost a consumer pays for private passenger automobile insurance. Among them is a community’s territorial ranking. The main component that determines a community’s territorial ranking is the claims experience charged to a community when a driver from that community is found to be legally at-fault for an accident. When territorial assignments are assessed, the four most recent years of claims experience for each community is compared to the same amount of claims experience statewide. More specifically, the loss per insured vehicle garaged in a community is compared to the loss per insured vehicle in the state as a whole based on the claims experience for five major coverages (Bodily Injury Liability, Personal Injury Protection, Property Damage Liability, Collision and Comprehensive). Catastrophic events, the quality and volume of vehicles in a community and the variance in driver experience within a community are factored-out in arriving at a territorial assignment.”
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To be honest I do not completely understand how the rate tables are applied to get your rate. But when you look at the three territories above, 14 has the highest costs for the different factors that make up your rate, 12 is lower then 14 and for some reason 27 is the lower by quite a bit. If there is someone that knows how to make sense of this, please post.
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That being said, I could be wrong but I am unclear at this moment.
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As far as your second point, come on, 1 and 2 versus top 3, is that really a big difference. The general point that they have little to gain from deregulation still stands.
However do you manage to survive as an adult in society without having mommy, daddy, or the government tell you what to do?
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Hint: you shop around. If your haircut is crappy and expensive, you find a new barber.
When the government starts requiring that I get a haircut to participate in daily life, I’d also like the goivernment’s assistance in ensuriing that my barber is not making too large a profit on selling haircuts to the newly expanded and captive market. And that he’s not selling me a “haircut” that doesn’t meet the minimum standard of the service the government is requiring me to buy.
It’s mandated that you carry insurance if you have a car (and I’m not sure that’s a bad thing – I used to live in NH, and that’s not the case, and my insurance rates had the added rate increase for “un- or under-insured other driver” in case I was hit by someone who didn’t have insurance).
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Therefore, someone who has to live in Boston for whatever reason or whatever, gets punished by this mandate to have a car, even if a car is a necessity for them (say, they work in another town where the train/bus goes).
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It’s insurance – it’s supposed to spread the risk pool. Insurance companies get around this by refusing to cover risky people, and by changing their rates due to that risk factor, making it too hard for some risky people to even buy insurance.
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Our system ensures that doesn’t happen, by spreading the cost around to a larger scale, the way national health care would do if we had that.
“gets punished by this mandate to have a car” I meant “gets punished by this mandate to have car insurance”.
I’d rather the government ask you to stand on your own two feet and look after your own pocketbook.
When their back is turned, it is easier to rob them.
Personally, I’d rather the government devise the best public policy that serves the greatest good for society at-large and the majority of people. But, then, I’m one of those “big government liberals.”
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You, apparantly, are one of those who think government should be doing nothing but building roads and sending our young people off to police the world in the name of “national security.”
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To each his own.
What an utterly ridiculous and prejudicial statement. People like you that try to reduce others’ positions down to some pejorative statement like “think government should be doing nothing but building roads and sending our young people off to police the world in the name of “national security.”” piss me off.
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It must be nice to live in the fantasy world you live in that you are the only one that is right and everyone else is wrong. To have the “knowledge” that no other point of view has any validity.
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No wonder why the two party system is pretty much dead in this country if people think in such absolutes.
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Maybe you should try to understand something about the other side. I am a capitalist, free-market conservative. That doesn’t mean I think we as a society should never help anyone, it means I believe the mechanism of the help is to have as little government interference as possible. People will help [insert your cause here – the environment, the poor, the handy capped, etc.] if the government is not taxing them to the point where they have no money or time to do so. In other words, I know better how to spend my money then some far away bureaucrat in Washington or on Beacon Hill.
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Grow up and do some research on the other side instead of trying to pigeon hole them.
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Is anyone else picking up on the irony here…?
I’ll give that to you, could have worded it better.
I’ll give that to you. I could have worded it better.
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I continue to disagree that you (or I) “know better how to spend my money then some far away bureaucrat in Washington or on Beacon Hill.”
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I believe in taxation. I believe in re-distribution of wealth. I believe the government should spend our tax dollars in ways that advance social goods.
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Other points of view have plenty of “validity” and contribute to the necessary debate about which particular actions the government should take. However, I personally think the position that they best way to achieve the society we want is to “have as little government interference as possible” is intellectually indefensible and a direct affront to the democratic system I believe is essential.
I agree with what you’re saying too. The “it’s my money” argument is a frame that is designed to preempt all debate. Instead of us trying to decide whether it makes sense to pursue a common good with respect to auto insurance, the “it’s my money” crowd will drop in and state that government is inherently bad, no one should argue about that, and any taxes are essentially legalized theft.
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Not all Republicans do this, but more and more do. Watch for the word “subsidies” as very important toward advancing this frame.
The “it’s my money” argument is an important part of the debate about taxes and socialized programs. It is one of the principles that helped found this country.
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I will give it to you that some Republicans/conservatives think all taxes are bad. Just like some Democrats/liberals/socialists/progressives think all private property is bad. These are the extremes of both sides.
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I do believe that it is necessary to levy taxes for certain things like prosecute wars, provide for the common defense, educate the populace, build roads and other things that promote inter state commerce, etc. I don’t believe that it is necessary to levy taxes for social welfare, to make insurance more affordable for people that choose to live in a big city, etc.
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As far as all government being bad, I agree with Churchill who said “Democracy is the worst form of government except all those other forms that have been tried from time to time.”
Your logic eludes me.
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Since I admit to favoring taxes as a concept (as the best way for government to have the necessary resources to redistribute in ways that benefit society), I should be voluntarily paying more myself?
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I would, and this will drive you conservatives nuts, pay a lot more (10%?) in state income tax if it were a guaranteed trade off for getting rid of many other forms of revenue collection – state and local – that aren’t as progressive (the lottery, the tolls, most sales taxes, property taxes, excise taxes and many “fees”).
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As it is, I pay what is required by law – nothing more and nothing less. On the I’m not so selfish front, I would point out that I happily pay a large cigarette tax and the gas tax. Even though I’m a smoker and frequent drive, I support these taxes as disincentive to smoke and drive.
Come, come! As a believer in taxation, and redistibution of wealth, why not take the attitude that a journey of a thousand miles begins with a single step?
If you look into your own heart, and you find nothing wrong there, what is there to worry about? What is there to fear?
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I have to give your credit. You are the first liberal I have dealt with that admits to being for things like taxation and re-distribution of wealth.
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As far as your statement “intellectually indefensible and a direct affront to the democratic system”, to be honest I don’t even understand your making this connection. What is it about a democracy or rather democratic system that means you have to have more regulation?
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… I think it is fairly inevitable that democracy breeds “big government” (something I think is a good thing).
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The more democratic a society and their government, the more representative of the people’s views it will be. As the majority of the people start to believe society would be improved if government provided an additional service (i.e. public education, health insurance for the elderly and poor, retirement insurance, limits on exploitation of labor, environmental regulations, discounted presciption drugs, more homeland security etc, etc, etc), the more “big government” (regulation) one gets.
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That’s all i was trying to say. Still make no sense?
It definitely does make more sense, thank you for the explanation.
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I agree with your statements (i.e. the more democratic a society gets the more big the government gets) but not the concept that this is good or how this should be. And I would argue that the Founding Fathers are with me in this that is why we don’t have a true democracy, we live in a democratic republic. Another support of this view is the creator of the system, Pluto.
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Some of the things you sited require taxes to function (i.e. education) while others do not (environmental regulations). There are free market, small government ways to accomplish some of these things.
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The Massachusetts Department of Environmental Protection (DEP) is a perfect example. This is a privatized system, meaning that the work of assessing and cleaning up the spilled chemicals and oils is not paid for by tax dollars. It is called the Licensed Site Professional (LSP) program and is considered the model to many other states on how to conduct environmental regulations and cleanup. Connecticut for example recently changed to a carbon copy of this program but call it the Licensed Environmental Profession (LEP) program. The person who is responsible for the release (the RP) hires an LSP to conduct the assessment and cleanup activities. The DEP sets the guidelines that the LSP must follow and reviews the LSPs work. The RPs have to pay fees based on what work they have done that is being reviewed by the DEP. There are incentives for doing work quickly (lower fees) and disincentives for dragging your feet (higher fees). There are specific deadlines that ensure the majority of the spills get cleaned up in a timely manner. Some spills will slip through the cracks but the DEP assess fairly heavy fines on RPs that don’t do the required work.
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There are many LSPs in the state and they set their own rates based on free market principles. RPs that are not satisfied with the quality, price or timeliness of the LSPs work have the option of taking their cleanup project to a new LSP. LSPs that produce work that is in poor quality or do fraudulent work are called in front of a board made up of their peers and state regulators and they can have their license revoked, suspended, or have a formal complaint put on record that RPs have access to review.
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I am not saying this is perfect, there are some flaws. The biggest is that the fines and fees collected by the DEP go into the general fund and then the DEP is funded out of the general fund, making it susceptible to the typical budgeting process. This could easily and should be fixed by having the DEP responsible for the management of its own funds collected from the RPs. Many of our towns have water and sewer departments that operate in this manner due to this exact reason.
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I do think, with that change above, this could serve as a great model for many other programs for the common good in the state.
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My point is that big government is not the only answer to provide the programs that most people would agree are for the common good.
I’ve never heard a liberal argue for big government simply for the sake of big government.
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However, most conservative arguments use, as justification, small government.
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Why can’t we argue the merits instead of arguing over the size of government?
That is exactly what I have done. On top of that, several times I been give the “big government is better” arguement with no supporting information.
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If you want reasoning behind the “small government is better” arguement, just look at the posts by me and the few other conservatives posting on this site. There are much more people saying that the liberal point of view is better with out giving any support.
… There are certain things that government does through regulations that could otherwise be done (better?) as a mix of government regulations that encourage the free market to play a part in the solution.
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Environmental regulations (which are usually seeking to rectify a “tragedy of the commons” economic situation that the unregulated free market does not have the necessary incentives to resolve) are perhaps the ultimate example. That’s why we as a society have vascillated so much between government and private action in seekeing solutions to environmental problems.
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Yet, I would argue that much of the programs government spends most of its money on could not be easily replaced with by the free market.
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About 25% of the Federal budget goes to Medicaid and Medicare while another 20% is paid out in social Security. While we could replace the payroll tax with individual retirement and health care plans (as government workers themselves do!), it should be pretty obvious that these private programs wouldn’t serve the same purposes (providing retirement security and health care to even seniors that never worked) that I think are so essential to our society.
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Another 20% of the budget is on defense and veterans. Let’s leave aside how much savings we could squeeze out of there for now (though I know it is less than many progressives proclaim)?
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15% is for unemployment and welfare programs. While these could also be reformed (and have even more money squeezed out), I would again argue this is the kind of government spending that’s difficult to replace while providing the social safety net most support or at least understand is neccessary.
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10% is on interest on the debt.
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That leaves about 10% for all those other “big governmennt” programs (federal highway programs, science funding, agriculture subsidies, foreign aid etc, etc, etc). Sure, we could spend less on all of this but you’re really arguing about the details now – the policies themselves, the implmentation of the programs and ineffeciienceies in service delivery.
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Pretty quickly, I would argue, people from both sides of the “it’s my money” versus “it’s my socialist utopia” debate are able to come to the understanding that most government spending is in support of programs and policies that are worth at least a large percentage of the money spent on them.
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Arguing about taxes and “government waste” makes for good political theatre but they are not truly at the heart of our major philosophical divides. Differences over religion (God) and the “nature v. nurture” debate are much more of an underlying divide than is generally acknowledged.
It makes it fair, it makes it so we don’t have to shop around. if we want to shop around, we can shop around for the carrier with the fastest service, or the most adjusters, or the nicest agents. But as far as what we pay, it should not require us to be calling a hundred different places and making them give us quotes.
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Why do you want to have to do that? So you’ll get the drop on the other guy, so he pays the brunt of the cost? Nice.
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And wealthy communities and bedroom suburbs should subsidize the costs of poorer city drivers. If they don’t like it, they can move into the city and get subsidized. Poor people pretty much always live in places with more crime and car accidents, not by choice, but because they are poor. Rich people don’t. I suppose it subsidizes the urban drivers when it should subsidize the T though – but hey, that could be factored in – make suburban drivers pay more than their actual risk, but make half of it subsidize the T and public transporation, and only half subsidize urban drivers.
As I do when I invest my money in a house. Or choosing a mortgage. Or a car. Or choosing a health insurance plan. Or choosing a school for my kids. Or stocks. Or 401(k) funds. Or a cell phone plan. Or a telephone service provider. Or an ISP. Or anything.
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If you are too darn lazy to pay attention to what you do with your money, why should I or anyone else care? It is your money.
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I don’t see any “liberal” reason to support our asinine system. On this thread, the “liberal” defense seems to be that people are so droolingly infantile and stupid that they can’t figure out the difference between trousers and a shirt, never mind shop for insurance.
insurance lends itself to regulation. We should just pay the fair price for a standard service.
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Cars are all different, as are houses, so obviously some are worth more. But INSURANCE isn’t! Why would some companies charge more than others? It’s insurance, not a work of art! It is a mathematical calculation based on how we fit in with everyone else, and it’s complex. It should be calculated by the state, fairly and uniformly, and used by each company. Companies can compete on service reputation, like having more agents or adjusters, and work behind the scenes to become more efficient, but the prices for coverage should be fixed. I don’t know much of our premiums go to the cost of doing business and how much goes to payouts, but if it is higher in our state we just lower the rates to force the companies to raise their efficiency, like we do. Or, we get rid of the companies altogether and do it ourselves, so it wouldn’t be insurance company versus insurance company.
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Mortage companies are notorious at taking advantage of customers, as are stocks and 401K plans that make their money off of the little guys that have less information. Maybe you love sitting in front of your computer out there in Pottersville researching ways to get the better deal than everyone else on these things, but I can’t stand having to do that. Call it lazy, or call it having other things I’d rather do with my time, I just get zero pleasure out of it, and it doesn’t even buy us anything that we shouldn’t already be getting for free.
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I shopped around cell phone plans and hated it, it meant taking an extra week to actually get a phone because the first times I got close I’d balk and have to go home and research other companies, and I drove my girlfriend crazy trying to decide, and probably burned an extra five gallons of gas with all the trips it took me. Does a text message really cost 10 cents to send to my phone, or are they price gouging?
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No, it isn’t. Some companies use agents which get large commissions, others go direct on the internet. Some have good service, some have bad. Some offer various options (such as ‘accident forgiveness’ or whatever), others don’t. All these lead to different levels of expenses, and different prices. All of which the consumer should be able to make choices between them.
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Why?? You seem to assume that anything that the companies calculate wouldn’t be fair. There are two levels of fair. The first is being an accurate reflection of what you’re expected to cost. The market itself would be fair in this way – certainly more so than government bureaucrats – since when are they the model of efficiency and correctness? If any company is wrong about this, then another company will come along with a better calculation and take their business away. That’s how it works.
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The second part of fair is subjective and its about making sure its affordable. I have no issue with some government controls in this respect. But that’s very different than a communist-style price setting (and no, I’m no righty who goes around yelling communist all the time – I mean this one literally). We have the right to decide as a state how the risk will be spread, we can set the rules. But then we should let the companies play within those rules rather than treating them like children and controlling every step.
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Insurance companies in Mass make some of the highest profits and they have to – because why else would a company put up with being told what to charge for their own product? You’re paying a premium for them putting up with all the regulation. Where do you think they get the millions to pay lobbyists to keep the system as is?
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And then you have to pay for a pointless government bureaucracy to do calculations that everyone involved is capable of doing on their own. So you’re paying on both ends.
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I’m sorry you don’t like making decisions, but that’s what life is about. Learning, being knowledgeable, and making decisions. If you don’t want to put time into it, then you’ll get what you get. If you do put time into it, then that’s the tradeoff you made.
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Or should we pay several million dollars a year to a new government agency to decide what you should pay for cell phone service? The government doesn’t exist to save you from having to make any choices in life.
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I’m all for full disclosure regulations and making sure that everyone has the information they need, but then it comes down to you doing whats right for you.
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Price gouging doesn’t mean costing more than you think it should. Nor does it mean making a profit.
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You have the complete freedom to chose whether to use text messaging or not, and so does everyone else – I have some friends who had it disabled because they didn’t want to pay for ones that people may send, or be tempted to send them themselves.
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Meanwhile, ever company sets their own rates of their own will, and they have different rates, so you also have the ability to chose who to go with. Not to mention to pick a package that costs less if you use a fair deal of it.
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All of this makes it completely impossible that its ‘gouging’, when you can just say ‘no thanks.’
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So, no, it doesn’t cost them 10 cents, nor is it price gouging.
Standard auto commission is 10% – and if you work in an agency, you usually get 5%. As opposed to 20 – 25% for homeowners and 50% for life.
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Yeah, we just sit around all day, hoping for that 5% to walk through the door. So people can call us at home on Thanksgiving Day, and tell us how they were in a car crash, and why won’t the company send them money that day so they can fix their car over the weekend.
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Auto is the LEAST profitable line for agents, and generates the most complaints and paperwork. When I’ve had people rant at me about the fat commission I get for their insurance, I offer them a check for $35, and suggest they go elsewhere.
Peter,
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Sorry, you’re right, I do not have the facts about the size of the commissions. I retract that and apologize. Nonetheless the general point I believe still applies – there are different ways to buy insurance and different features and different interactions and the pricing for those should be available and set by the free market.
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Commissions were but a small part of the overall argument and I’m apologize for the mischaracterization. I do believe the argument as a whole is still quite valid though.
the republican creed is they do not want to kick in for any common benefit. So why do they think car insurance is any different.
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If there were no car insurance, would people drive differently? Would it stop reckless driving, speeding,
imparied driving? I guess so.
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So, no car insurance as a starting point and take away any thought of being sued and paying for another’s damage to person or car. If people want to insure their own car or not, it is ok.
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let’s see if the repubs get behind this one.
How is insurance kicking in for “any common benefit”? It is insuring yourself against common risks. No different then putting your money in a bank, having home owners insurance, health insurance or errors and omissions insurance if you own a business.
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I am not a republican, but I am a conservative and believe in a little regulations and taxes as possible. That being said, I believe that a minimum amount of insurance on damage to other people’s property or people themselves is perfectly reasonable. As I said in my previous post, the socializing of the insurance by rate setting is not good and should be stopped.
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Insurance for damage to your car is optional now and should be, it is all about risk management. My wife and I own 3 vehicles, an SUV, a Jeep and a work truck. The SUV and Jeep are nice vehicles in good condition and we have “collision” insurance on them. The work truck is older and has scratch and dents; we do not have “collision” insurance on that one. However, I spend a lot of time on the road in that truck, so I carry higher coverage for damage to other people’s property or injury to other people. The more time on the road, the more risk of an accident. So I managed my risk and chose insurance based on risk factors.
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As far as “the republican creed is they do not want to kick in for any common benefit”. Grow up, republicans and conservatives believe in helping others, they just disagree with your mechanism. They believe helping others is a personal choice not the job of the government. Give me back the 40% of my income that now goes to taxes and I will be able to help out others. There are many people that believe in helping others, weather those are family members or friends in need or someone at their church or work, etc. that are conservatives/republicans. Out of the last election for governor the candidate I most respected was Grace Ross because of her personal actions when it came to charity. I just couldn’t vote for her because of her political beliefs.
As silly as saying the true Democratic posotion is that there should be no insurance because all cars, like all other private property, should be banned as a capitalist plot to oppress the proletariat.
Republicans (and lots of us progressives too) buy auto insurance (whether we understand this or not) in order to avoid the costly and time-consuming process of litigation. Without auto insurance, we would have to sue or be sued avery time there was an accident involving more than one person.
Insurance is a safety net. We like it to be provided by a diversified group of private organizations that gives rise to healthy competition and choice.
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What we don’t like, however, is big brother telling us what insurance we can and can not have, which is against the tenets of free trade.
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Same situation, different context: We were required to use USPS for all mail-related things, no DHL, FedEX, or UPS.
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It’s just foolishness.
I confess that I know little about car insurance, as I’ve never paid for it. I’ve only “owned” a car for three years, and it was covered as part of my parents plan.
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But, why not do something like either (a) require insurance companies in Massachusetts to offer a set number of specific plans of coverage, where they can only set price. If they want to offer other plans, that’s fine too. A specific plan would be what kinds of coverage, what deductible, that sort of thing. Alternatively, the state could (b) require the insurance company to offer plans that are in certain coverage “ranges.”
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My concern is that car insurance will do what health insurance has done — offer flimsy plans that offer little protection for cheap, and then offer solid plans at really high rates, with almost nothing in between.
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As for risk balancing (and cost balancing) across towns, I’m not sure I’d favor it. After all, it seems to cost more to insure a car where public transportation options exist. If so, I don’t have as much of a problem with it, since, well, there are other options (and its not clear that a person living in Wellesley should be paying their massive tax to keep Wellesley “auto-safe” and also subsidize someone living in Dorchester.
What you discribed is how other states, with cheaper rates, regulate auto insurance.
You complain that people in ‘low-risk’ communities like Wellesley subsidize ‘high-risk’ communities like Dorchester, a neighborhood in the city of Boston. Don’t people in Wellesley commute to Boston on a daily basis? If rates are distributed at all, shouldn’t it be distributed across a metro area? Or should we create another cost-of-living incentive that adds to urban sprawl?
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Another option would be to go in the opposite direction and allow greater variation in auto rates. A technical solution might be to track the whereabouts of your vehicle with GPS, and the insurance company could create a rate that takes into account the accident/theft rates of the immediate area the vehicle is housed, driving patterns, etc. After all, why should residents in low-crime areas in Dorchester and other parts of Boston have to subsidize the rates of higher-crime areas in the city?
but they also are contributing more to the MBTA then they personally are benefiting (through 20% of what they pay in sales tax).
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From a public policy standpoint, Boston has lots of cars — some might even say too many. Figuring out a way to reduce the number of cars without reducing the quality of life is awfully difficult. In the mean time, figuring out ways to make a car cost so much in Boston that folks just give up and (a) leave or (b) sell their car is easy. I admit that (a) is problematic, and neither (a) nor (b) are great solutions, which is why I’m always pushing for more MBTA — more expansion, more trains, more service, and affordable fares.
If the insurance rates were deregulated, the commuter traffic into Boston would likely come into play. Your insurance risk would not just be set by where you live but also where you commonly drive. If you live in Newton (low crime, moderate traffic) and you commute into Boston in your car (high crime, high traffic) you would likely be in a risk category that would be similar to people who live in Boston.
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In theory, this could serve to reduce traffic. If there is an option where you can prove you take the T more then X number of days you could eligible for a reduction in your insurance rate. This would result in higher rider ship on the trains that may reduce the daily cost of the commute. This could be open to possible fraud, but insurance companies would be motivated to reduce that fraud, again, based on free market principles.
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I know it seems like I am a one trick pony on this topic, but I think a free market system with the state setting a minimum coverage required to register a car would result in lower rates to the majority of the people in the state and have other benefits as well.
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As far as the high rate of insurance (I think I saw 92% of all vehicles on the road in Mass are insured) this is likely due to the fact that proof of insurance is required to register the vehicle as apposed to being a separate piece of information that drivers carry.
…that loss goes onto Wellesley’s loss ratio, not Boston’s. The accident is counted where the car of the person at fault is GARAGED, not where the accident occurs. This applies to vandalism claims in parking garages as well.
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So…..people from BOSTON are driving up that territory to 26, not out of town people as urban legend has it.
The Wellesley driver will still add to congestion to/from and within the city of Boston. This still makes it difficult for everyone to get around smoothly.
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There are several explanations for the higher loss ratio: Boston drivers are more often the person at fault in a collision with out of town drivers, the Wellesley traffic effect is negligible as Boston drivers crash into each other, or the higher loss ratio is not primarily driven by vandalism/theft.
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Which do you believe is the explanation for higher loss ratios in Boston?
Then you recognize that metro-area drivers contribute to the general traffic problem in Boston even if they are not directly involved in an accident.
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Perhaps it would be fair all around if Boston drivers paid market rates for insurance, while at the same time charging for driving into/out of the central business district (as London cities & others do)?
I suggested that the overwhelming NUMBER of cars garaged in Boston, compared to the NUMBER of cars garaged in Wellsley on a mathematical probability basis alone made for…More Cars. Hitting Each Other.
How about this.
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Wellesley drivers can afford to put in less claims to their insurance, and can also afford to settle claims outside the insurance system.
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If my car has its window smashed, I’m not going to call it in because I know that I can either pay $300 to get it fixed, or I can call it in and pay nothing, but pay higher rates in the future over it.
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I was in a minor accident a few months ago. Not sure of the fault — I backed into a long unmarked trailer being towed in a parking lot. Never saw it, even though I checked fully, because it was 2 feet off the ground, no higher.
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The guy offered to accept $150 and he would fix the damage himself, no insurance involvement. That was a pretty good deal to me.
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A poor person can’t work that kind of deal out. He doesn’t have $150. And he’s more likely to see an auto accident as a chance to pocket a little cash.
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Sure, it doesn’t make up all the difference, and I would accept the premise that people who are aren’t in total control of their lives, thereby winding up poor, are probably also not in total control of their driving. But that is what I expect from a society made up of all kinds of people, and as long as people aren’t willfully causing accidents, I realize that they are a cost of driving. I’m willing to pay into such a system — as long as everyone else is — so that people who need help with a claim get it.
Then why did you give the guy the $150 instead of ‘supporting the system’ by filing a claim?
The $150 that I paid the guy in exchange for his own labor and effort putting the axle on himself lowered the cost to the pool. I saved the pool money by staying out of it, plus I saved the pool administrative costs associated with claim processing.
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I don’t know how filing claims can be seen as “supporting the system”.
The state’s sytem of regulating auto insurance rates serves one basic purpose. As others have said, it “socializes” rates in a way (and in a way I favor).
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The system definitely ensures that young (inexperienced) drivers and those living in urban (high accident and tehft) areas pay less than they do in other states. If we simply deregulated auto insurance, then those drivers would be required to pay thousands of dollars more per year while those with longer, safe driving records and those in less-urban areas would save hundreds of dollars.
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What’s in it for you older rural drivers ask? Most importantly, spreading out the risks (and costs) like our system does helps to ensure low uninsured motorist rates. Massachusetts has the second lowest rate of uninsured drivers in all of the United States (just behind Maine). We certainly want to continue to make it “compulsory” (to reduce the financial waste of litigating too many accidents) but by keeping it more affordable we also all benefit by making sure that too many don’t simply drive uninsured because they can’t adfford it (94% of Massachusetts’ drivers are insured).
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The Globe editorial still available here lays out clearly and in some detail why deregulating entirely would be a terrible idea: http://www.boston.co…
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All that being said, we could and should keep the cross-subsidy benefits of regulation while lowering prices for everyone by expanding the ability of people to chose more comprehensive “no fault” coverage. You would then have the choice to buy “less insurance” (buying only the right to have your economic and medical loses reiumbursed giving up your right to sue for pain and suffering damages) if that’s how you chose to save money. This is the only meaningful reform being proposed.
Thanks for the helpful link to the Globe piece and the many excellent, informative comments above. Here is the money quote, I think, from the Globe:
No way! This is an idiotic idea: encourage dangerous drivers, actuarially speaking, by taxing safe ones. Driving is not a human right any more than owning a cell phone or a TV; indeed, it has many socially disadvantageous aspects and it is questionable whether, as a matter of public policy, we should encourage it at all. Set the prices free.
I’ve seen estimates that young urban drivers would be paying upwards of $10k/year in insurance. Given that such drivers are usually poor, doesn’t this basically take away significant opportunities in their lives and virtually ensure that they will fail in life?
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Also, you seem to assume that via subsidies, dangerous drivers are being encouraged, but chronically bad drivers already get charged thousands of dollars more per year in insurance surcharges, and that isn’t discouraging bad drivers. What makes you think that charging them even more will suddenly work?
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How about a true free market — let people decide if they want to carry insurance? Would you support that?
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Would you support higher rates based on someone being divorced, someone missing some bill payments, or even someone who is in an accident but is not at fault? That’s what “setting the prices free” would result in.
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That Globe quote is very misleading because it neglects to mention how much the “remaining drivers” pay. I live in Springfield and my insurance bill is $1,700, and that is with a spotless driving record. Yes, that includes the “subsidies” from other communities. How much is your clean-record bill? $500? $700? Why is that “fair”? Why should you pay less than me if we have identical driving records?
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Why can’t we choose our own risk pools? Why should we even have risk pools? Maybe we should “bank” our insurance premiums and draw from that?
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I’ll tell you why — because insurance is all about subsidies and socialism. We all pay into the largest possible pool so that if we need it, we can draw from that pool. Once we start trying to slice and dice things based on attributes other than uncommon behavior directly tied with the activity being insured, the whole concept of insurance breaks down.
I wonder if those estimates were produced by Commerce or Arbella Insurance, or the state regulators whose only job it is to protyect us from the horror of competitive insurance markets.
I don’t know who came up with that estimate, but I found a Globe article (Feb 29, 2004) that said that an averageRoxbury driver is being “subsidized” (a word used as part of a frame, by the way) by $1,368. Common sense leads me to conclude that teens in Roxbury are being subsidized even more.
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Most quotes on the 1976 deregulation issue simply referred to prices “skyrocketing” in certain areas, and that young urban drivers were “priced out of the market”. Here’s a typical quote:
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I think the basic question we must ask is whether this state is comfortable telling people that they are not allowed to drive. Is driving a right, a privilege, or somewhere in between?
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I think it is not quite a right, but darn close to it. Loss of ability to drive handicaps a person significantly, outside of dense areas with great public transportation (i.e. Boston).
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Because of that, I think that our state must not make it overly burdensome to drive.
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Let me give this as an example; let’s say that someone drives drunk and is pulled over. The state says that the penalty for this is loss of license for a certain amount of time.
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What if insurance companies determined that this person’s insurance should be $50,000 per year for the rest of his life. Isn’t the effective penalty then loss of the ability to driver forever?
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If the state isn’t willing to impose that penalty, why should private companies with state enforcement be allowed to?
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One more thing to consider — I found a Globe article that stated that insurance companies are immune from anti-trust regulation as a result of the McCarran Ferguson Act of 1944, and that Massachusetts laws are weak against interstate corporations. That means they can conspire with no recourse from the public. Should we give them even more power?
As I stated in my original post, I continue to believe that the cross-subsidy benefit is a major advantage to our state’s system.
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The basic problem with your premise is that you equate encouraging people to buy auto insurance (a good idea economically and socially) with “encourage[ing] dangerous drivers, actuarially speaking” (a terrible poublci policy, of course).
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Your system (setting the prices free) would drive up auto insurance rates so high that the many “dangerous drivers” (yes, actuarially speaking) would be priced out of the market for auto insurance. But, and this is key, experience shows this doesn’t mean they will stop driving around dangerously (actuarially speaking).
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Virtually every state has a compulsory auto insurance system of some sort. Yet, the average national uninsured motorist rate is estimated to be about 15% and may be as high as 30% in some states. This is bad for everyone since it increases costs for those of us with insurance and increases costly litigation around accidents.
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Massachusetts has a very low (<5%) uninsured rate largely because we continue to “socialize” the system with our cross-subsidies. Getting rid of it would lead to a few less “dangerous drivers” on the roads but far more “dangerous drivers” that continue to drive but now chose to risk driving uninsured.
And we regulate auto insurance so people in Boston will pay less. dukakis found that out during his nano-second flirtation with deregulation of auto rates (he reinstated the regulation right after how he saw what Brookline would pay).
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Lat time I checked – 2 or 3 years ago – Brewster was the most overcharged municipality in the state, paying 1.16 of its true actuarial rate. Chelsea – with thousands more cars – paid 0.87 of its true actuarial rate. Rural drivers subsideize urban drivers, the way God intended (unless it’s homeowners insurance, in which case we’ll give Cambridge a Zero FAIR Plan incrase rate, and Barnstable a legal maximum 25% FAIR Plan increase, and tell them to go screw – why should WE subsideize their risk?).
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The game is rigged, my boy, and the House (the one with the Gold Dome) always wins.
I am posting this to everyone that has been blogging on this subject. We have all (people on the side of deregulation and regulation) talking in hypotheticals. Why?
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I believe I am correct in this, we are the only state with regulated auto insurance. What is happening in other states?
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Take Rhode Island for instance. Are teens in Providence and Pawtucket unable to drive due to burdensome insurance rates? What are the price differences for a good driver between Providence, Newport and Warwick?
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Has anyone done any of these types of comparisons?
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I am going to walk the dog now so I don’t have time, maybe I will give it a shot when I get back. But if any has this kind of data, please post it or a link.
incomparable to crass “states.”
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I’m willing to compare us to Kentucky, Massachusetts, Pennsylvania, and Virginia, though.
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I just don’t know why anyone would want to have to have another thing they had to shop around for. Another thing to worry about getting screwed about.
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I think I have made this argument at least three times today.
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The phrase “common good” does not mean socialism. The mechanism to obtain the “common good” could be interpreted as meaning there should be no regulations and allow the free market to set the price. This all depends on you political/economic philosophy.
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While you see having to do research on a product or service as a burden, others see it as an opportunity to express their free market beliefs. It is where the term “voting with your feet” comes from. If I am not happy with the rate or service I am getting from an insurance company, I should have the ability to take my business else where. While I still can technically do that, the affect is severally diminished by the state setting the rates.
Wow, just wow
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Everyone is so politicized here that they cant see simple logic. This is not an ideological argument and I am disappointed but not surprised that it turned into one. Simply put we are now the only state in the union that does this, for the average consumer this leads to higher rates, perhaps it leads to lower rates for urban drivers, or higher rates for suburban drivers, but the thing is if we had true competition companies could compete over rates, rates would go down, and as companies don’t like to insure people that are more likely to get into accidents, bad drivers will be punished with higher rates and good drivers will be punished with lower rates.
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It makes complete sense, no fault insurance does not which is what some people were proposing as an alternative, in fact a giant truck plowing into a tiny car are both considered equally responsible with that system, and the current regulation limits competition to essentially two companies I believe that have no incentive to lower rates. Two companies. Thats a duopoly and frankly thats worse than a monopoly since it has the facade of competition.
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Some services need to be public, health care, transportation, in my view utilities. A car is not a necessity in today’s society, it is more efficient and more convenient but one could survive without one assuming there was good public transportation.
They can’t lower rates, even if they want to. That’s the point — the rates are set by the state. “Incentives” don’t enter into it. So it doesn’t matter if there are two companies doing business in MA, or one, or 50. Under the current system, your rates will not change regardless of how many companies are selling car insurance here.
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Also, we don’t have no-fault insurance. Your rates go up if you were in an accident that was your fault, or you were cited for a moving violation.
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Argue for deregulation if you want — I think it’s a discussion worth having — but be sure you know what the current system is first.
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Also, as for a car not being necessary, that’s really not true anywhere but in the state’s urban areas. As Peter Porcupine has repeatedly noted, the state’s rural residents — of which there are quite a few — cannot just mosey down to the local grocer for a gallon of milk, and there’s virtually no public transportation out there.
Cabs, MBTA, Zip Cars, Rentals – add ’em al up, and it’s less than your auto insurance.
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I once worked at an agency in Cambridge. I was taking a Caravan vanpool to the city, or a bus and the Lechmere subway on days I missed it, or driving once in a great while – and worked with a woman who was driving from 3rd St. to Cardinal Medeiros Blvd. – about 4 blocks. MADNESS!
I filed a claim for damage done while my car was parked in a garage. It wasn’t a moving violation. Even though I wasn’t at fault, I was told by the insurance company that filing the claim might result in a higher rate. Others where I work have experienced the same thing (vandalism in this garage is not uncommon).
…unless the company is able to subrogate its loss by catching the offender and making him pay it. That’s Mass no-fault – there still has to be a guilty party, you just don’t have to go to court to prove it – a subrogation unit somewhere will make that determination. My favorite ‘no-fault’ story was with Commerce – two commercial vehicles both insured by Commerce had an accident with one another. both got checks for damage right away, as both had collision, but the DEDUCTIBLE was held up SIX MONTHS as they subrogated against – themselves. I remember asking if they were flying little paper airplanes from desk to desk in subrogation, or what, as all the facts from both parties were available to them within days SINCE THEY INSURED THEM BOTH.
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We don’t have true no-fault, but a variation of it (Mass. has the most convoluted insurance laws in the nation, for ALL products!). In other states, if you have a moving violation and are at fault, the company can cancel your coverage. Here, they have to keep you, even if your idea of Sunday fun is to get drunk and run over small children and dogs. AS LONG AS YOU HAVE A LICENSE, YOU CANNOT BE CANCELLED, NO MATTER WHAT YOU DO. And, as an additional benefit, surcharge points are ‘capped’ at 35. THAT is Mass. no-fault – no matter what you do or how you drive, you are entitled to coverage.
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I don’t understand why companies aren’t falling over one another to write business here.
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I expect that most people think this is a good thing. A moving violation isn’t like murder, you know. I’d bet that most people in this state have committed more than one in any given year, perhaps more than one in any given day.
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Let the state legislature set the penalties for getting drunk and running over dogs, let the insurance companies manage their claims. When an insurance company decides that you can’t get coverage and the state mandates that you must have coverage, you are screwed, and have no recourse.
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Being a Cape homeowner, you must understand that, right? It kind of sucks when all insurance companies decide that they don’t want to deal with your risk.
The number one problem, for me, is that judges do not take away licenses – and even when they do, people get ‘hardship exceptions’. Now, we can confiscate vehicles under Melanie’s law, but that only applies to drunks. What about the Alzheimer’s patient, enraged by so many strange people in his Watertown of 1934, who ‘decides’ to ‘scare’ a few of them? He can keep his keys unless a doctor files a medical order – and most are afraid to, because they don’t want to be sued for malpractice.
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I want Denver boots placed on the cars of those with suspened licenses. I want people to lose their license for vehicular homicide. I want DANGEROUS AND CRAZY PEOPLE kept off the roadways by the legal system.
And you do realize that the sentence for murder is not death or life in prison, right?
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Our society is based on second chances, and occasionally third and fourth chances. If our elected representatives say that someone should be penalized lightly for a first drunk driving offense, why should a private company be allowed to come in and say “well, you may have the right to drive, but it’s going to cost you $40,000 a year to do so”?
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You have the right to lobby your legislature to put people in jail for life when they commit vehicular homicide. Remember though, you’ll need to pay more taxes to pay the $30k/year it takes to support them.
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A friend of mine ran over a kid on a bicycle when he was 17. I think the kid died. He is now an engineer, married, with 2 kids. He hasn’t run anyone else over since then. If his right to drive was taken away forever, I doubt he’d be the productive member of society that he now is.
I’m a little less optimistic about those third and fourth chances than you are, having handled a lot of claims.
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Why should ALL drivers subsidize the $40,000 cost of a bad driver? Why SHOULDN’T that person pay for their own bad choices?
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And I didn’t say put people in JAIL for life – I said if they kill somebody, they shouldn’t have a driver’s license. Your productive friend can live on a transit line – we all pay for them.
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Tell me, how do you determine who gets to stand in front of the car of the person working their way through a third strike? And what do you owe to their family and productivity?
Using the “heartstrings” argument, aren’t you?
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How do we tell the people whose family died in the fire that a 3-minute response time is adequate? Same argument, but I suspect you’d argue for a fire station on every block to prevent such a tragedy.
…any objection to ‘booting’ cars WHILE the license is suspended?
I have no objection if no other driver will need the car during this time.
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Sauce for the goose, and all that.
My social liberalness makes me generally agree with the people who say that the cross-subsidization is a good idea in as far as making sure that we can keep insurance affordable for all, that we don’t charge people rates that simply are going to significantly increase rates of uninsured drivers.
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However, this is also about more than just that. You can have a free-market system (or at least mostly free) that includes a cross-subsidization formula. Think about what else is being missed. There is also much more efficient forms of customer service such as companies like GEICO and Progressive that have used the internet to vastly reduce costs.
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Should Amazon be forced to sell goods at the same price as everyone else? Should the costs savings of their model never be passed on to consumers?
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I don’t care if its government required or not, allowing competition will force companies to compete and will give people choices, which is the essence of a strongly functioning economy. There are plenty of states that have open markets and still require some urban/suburban risk sharing so that inner city rates are not unreasonable.
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And I can’t feel too bad for someone who doesn’t want to shop. Then don’t. Its your free choice. I’m sure you’re incredibly burdened by needing to go the grocery store, and gas station, and department store, and all those other horrible free market experiences. If you don’t want to shop on price, don’t, that’s completely valid too. But now no one has a choice.
Besides the basic concept that competition and the markets are better at setting prices than regulators. An antiquated regulatory system sends terrible message to companies looking to expand in Massachusetts.
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We are trying to grow our tax base and create jobs; we need to be competitive and attractive to companies. Being seen has overly regulated and expensive is not going to help our cause.