re: #119 marjoriemoon

That’s how insurance works - the company makes money by putting the spread between claims and receipts from premiums. If you have more demand for services, the result is either that insurance companies increase the premium or reduce their spread (reducing their profits). Insurers generally have around a 3% profit margin.

As for the difference in costs, you’d be surprised to see the difference in car insurance costs. I went to buy insurance for my new car in 2005 in NJ and the difference was considerable - several hundred dollars in fact between Allstate, Gieco and Liberty Mutual for comparable coverage. I’d say that it depends on the state you’re in. re: #134 Kosh’s Shadow

Some states have higher costs, in part because of the coverages demanded by the states themselves. Increased competition would push down the costs, but you’re right that some of the cost savings would be mitigated because some areas are more expensive (higher standard of living than others). There’s a solution to that as well, as not all insurers will move to have their coverage accepted in other states. They might choose to limit themselves to their local geographical coverage. So, if an insurer from Arkansas wanted to expand coverage into other states, it might limit itself to those in the Southeast that had similar pricing structures.

In the Northeast, you might see insurers from NY, CT, and RI seek access to the Mass. market, increasing competition regionally. Since they’d have similar pricing levels due to geographical issues - NYC has similar cost of living as Boston - you’d have increased competition from similarly constrained insurers.

As to marjorie’s complaint about insurer responsiveness, I’d argue that the increased competition would necessarily mean that insurers would have to improve customer service or else lose business to others. Under the current system, there’s little impetus to improve customer service since the focus is on delivery of the mandatory coverage under the law.