State Farm Feeling Pressure

The State of California has been pushing the auto insurance industry for about a year, trying to get them to fall in on major auto insurance reform. The state’s Insurance Commission claims that the auto insurance industry has been enjoying larger and larger profits, due in part to lower payouts and higher premiums.

Auto insurance companies such as State Farm Auto Insurance are asked to make these reforms to help the auto insurance industry, but the progress has been slow at best. Consumers are starting to see the changes including lower premiums, but the auto insurance companies are not moving fast enough for most.

Consumer complaints range from illegal accident surcharges on auto insurance policies to overcharging for auto insurance policies due to the zip code they live in. The newest reform for the car insurance industry is the fact that auto insurance companies can no longer base policies on where someone lives, instead they must base it on their driving record.

Companies like State Farm have fought the reforms, attacking them in the media, spending millions in advertising trying to get consumers to support their auto insurance policies the way they were. However, consumers and lawmakers were unfazed and the auto insurance reforms were passed.

The auto insurance company tried to say that the reforms would actually increase drivers’ policies by 60% of the state’s drivers, but experts say that they are simply using “scare tactics” to try and persuade people to not enforce the reforms.

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