WASHINGTON - Robert Gordon, senior vice president, policy development and research at the Property Casualty Insurers Association of America (PCI) issued the following statement in reaction to the release by the Department of the Treasury Federal Insurance Office (FIO) of the methodology it plans to use to monitor automobile insurance affordability, as required by the Dodd Frank Act (DFA).
“PCI appreciates FIO’s collaboration and constructive focus on the mandatory minimum auto insurance low-income consumers need to own a car. We remain concerned, however, that the final methodology remains flawed by declaring an artificial income level to determine affordability without reference to other household expenditures or consideration of risk or cost drivers as PCI had suggested,” said Gordon. “Individual finances, wealth and discretionary income may vary greatly from family to family. For most consumers, the cost of buying a car and maintaining and fueling it far exceed any insurance costs, making the regulatory fixation with insurance affordability somewhat misdirected. In particular, rapidly escalating distracted driving, traffic congestion and alcohol and drug use have been negatively impacting auto accident frequency and loss costs, which are the primary determinants of insurance rates and affordability. PCI will continue to work with FIO and state insurance regulators to develop real solutions addressing these concerns.”