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Path: utzoo!linus!philabs!seismo!hao!hplabs!hpda!fortune!amd70!packet!cfv
From: cfv@packet.UUCP
Newsgroups: net.wanted
Subject: Re: GEICO auto insurance
Message-ID: <230@packet.UUCP>
Date: Sun, 19-Jun-83 19:56:10 EDT
Article-I.D.: packet.230
Posted: Sun Jun 19 19:56:10 1983
Date-Received: Tue, 21-Jun-83 15:42:06 EDT
References: <521@ihuxf.UUCP>
Organization: PacketCable,Inc. Cupertino, CA.
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Having worked for an insurance company for a while, let me add a little
information into the supposed GEICO problem in New Jersey. The Insurance
commission in New Jersey is an elected (and political) office. These are the
people who set rates and policies for those who sell insurance in the state
(For those that don't know it, insurance is regulated by the states, which
means that an insurance company has to learn and keep track of 50 sets of
rules, none of which have any relevance to any other set. They also have to
work with 50 different commissions and set 50 different sets of rates. This,
besides being real confusing, creates a LOT of legislative overhead that has
to be passed along to the consumer. Another wonderful hidden cost of
government).

Anyway, in the mid 70's, the Insurance Commissioner in NJ decided to get
re-elected. To do so, he started screaming about the unreasonable rates that
insurance companies charge (blackmail and theft were among his vocabulary).
He ram rodded through some rates that even in the 60's would have been
seriously unreasonable. He also ram rodded through non-cancellation acts and
other extremely non-competitive things (The non cancellation act meant that
no matter how bad a driver you were, they couldn't cancel your insurance.
Because of the other restrictions, they couldn't even raise your premium).
The end result of this was that the bad drivers in New Jersey were being
subsidized by all the drivers in the other states and by the profits of the
insurance companies in the other states (BTW, if you look at the profit
picture of the insurance companies, you will find that most of them LOSE
money on their premiums. The place they make money is in the investment of
the premium before they have to pay it out. Usually, an insurance company
will consider an end profit of 3 or 4 CENTS per dollar good. Compare this
to 10 cents on the dollar for supermarkets and see if they are stealing you
blind). Rather than force the nation to subsidize the drivers of New Jersey,
some insurance companies pulled out of New Jersey.

We have GEICO home insurance. We are VERY happy with them. We have State
Farm Auto insurance and the only reason that isn't GEICO is because my
wifes family has been with SF so long that they are almost paying us to
stay with them. They premium GEICO offered was about $50 a year less, but
we had a sure thing.

GIECO is a good company, and I can recommend them. Except in New Jersey.
-- 
>From the dungeons of the Warlock:
					      Chuck Von Rospach
					      ucbvax!amd70!packet!cfv
					      (chuqui@mit-mc)  <- obsolete!