parnass@ihuxf.UUCP (06/17/83)
The following query recently appeared on the net in
"ih.misc":
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Any advice on the GEICO car insurance? I called them for a quote and
they offered me a policy at 70% of the rate I pay now. Is there a catch?
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You might find the following true story of interest:
Up until 1976, my parents and I had GEICO auto insurance in
New Jersey. The rates were low compared with other
insurance companies.
GEICO was pretty selective in choosing its customers. Ori-
ginally, its customers were government employees and their
families, who were rated as good risks. The State of New
Jersey then forced GEICO to stop discriminating and to sell
insurance to everyone. After a while, GEICO stopped operat-
ing in New Jersey, claiming that they could no longer
operate profitably in the state since they were now forced
to insure drivers of high risk.
When GEICO pulled out, its customers were left holding the
bag. We had to try and get auto insurance from other com-
panies. But, other companies wouldn't sell us insurance.
The only other alternative (since auto insurance is manda-
tory in N. J.) was to be placed into a state run "assigned-
risk" pool.
I remember walking into a State Farm office to buy auto
insurance. The agent led me through filling out the appli-
cation form. Then he asked which company I was presently
insured with. When I told him I had GEICO insurance, he
stopped dead in his tracks and said that State Farm would
not sell policies to former GEICO customers regardless of
their driving records. This happened to me at Allstate
also.
The problem became academic when I moved to Indiana in 1976
and bought State Farm insurance there. I have been with
State Farm ever since and have been quite pleased with their
service.
Robert S. Parnass
BTL, IH 1B-414 x5760 ihnp4!ihuxf!parnasscfv@packet.UUCP (06/20/83)
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!larry@grkermit.UUCP (Larry Kolodney) (06/21/83)
Relay-Version: version B 2.10 beta 3/9/83; site grkermit.UUCP Path: grkermit!genrad!decvax!harpo!seismo!hao!hplabs!hpda!fortune!amd70!packet!cfv From: cfv@packet.UUCP Newsgroups: net.wanted Subject: Re: GEICO auto insurance Date: Sun, 19-Jun-83 19:56:10 EDT The Insurance commission in New Jersey is an elected (and political) office. I've been voting in NJ for two years and following elections for a lot longer than that and I have never heard of an election for insurance commissioner. I'm almost certain that its an appointed position? Anyone else know? -- Larry Kolodney (USENET) decvax!genrad!grkermit!larry allegra!linus!genrad!grkermit!larry harpo!eagle!mit-vax!grkermit!larry (ARPA) rms.g.lkk@mit-ai
leichter@yale-com.UUCP (06/21/83)
I have GEICO here in Connecticut and have been reasonably satisfied; however, I've never had to make a claim. (At on point they screwed up the policy - but it was in my favor!) GEICO is not available everywhere; as others have pointed out, you can't get it in New Jersey. You also can't get it in Massachusetts. If I remember right, there is also one other state so blessed, but I don't know which it is. -- Jerry decvax!yale-comix!leichter leichter@yale
mark@umcp-cs.UUCP (06/22/83)
Whoops, supermarkets don't make 10 cents on the dollar. More
like 1 (one) cent.
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