Survey Finds Consumer Want Choice and Competition Between State-Based and Interstate Insurance Companies

Consumers Support Insurance Regulatory Modernization
Survey Shows Consumers Want Choice and National Competition

Representatives Melissa Bean (D-IL) and Ed Royce (R-CA) have introduced the bipartisan National Insurance Consumer Protection Act (H.R. 1880) that would permit competition between state and interstate-chartered insurance companies. This ConsumerGram provides new survey results and finds strong consumer support for interstate insurance competition.

Household Survey of Insurance Consumers
The American Consumer Institute’s 2009 Consumer Pulse Survey used a major national survey research firm to conduct and tabulate a telephone survey of American head-of-households. Randomly drawn, the survey sampled 1,000 households and found 897 consumers who currently have car or homeowners insurance. These insurance consumers were asked a series of questions about insurance topics. Census data were used to weigh the survey results in order to assure representation with national demographic characteristics. These results were cross-tabulated by relevant factors and are included in the Appendix of this ConsumerGram.

Consumers Want Choice
The National Insurance Consumer Protection Act would give consumers a choice between state and federally-chartered insurance companies. Under current state regulation, if a consumer moved across state jurisdictional boundaries of, say, the Washington, DC metropolitan area – either to or from the District of Columbia, Maryland, or Virginia – they would be required to find a new insurance agent or broker and insurance company. Similarly, workers or military personnel reassigned or relocated may find themselves looking for new insurance companies and agents, as well. Besides the inconvenience of finding a new agent or broker and insurance company, the time needed to learn and understand the nuances of insurance provisions in other states can be significant, because states have different levels of coverage, stipulations and terms.

Do consumers care whether their insurance company is state or nationally regulated? To answer this, we asked American consumers the following questions:

  • “If you moved into another state, would you like the option of keeping the same insurance company?”
  • “If you moved into another state, would you like the option of keeping the same insurance agent or broker?”

The results were strongly in favor of increased choice — 88% of consumers want the option to keep their insurance company (7% opposed) and 73% want the option to keep their insurance agent or broker (19% opposed). Support for the option to keep their insurance provider and agent was strong across all age, ethnicity and income groups, as well as gender and political affiliation (see Appendix).

Consumer Want Interstate Competition
Do consumers support and see any benefit to allowing federally-chartered and regulated insurance companies to compete with state insurance companies? To answer this, we asked American insurance consumers the following questions:

  • A congressional proposal would allow federally-regulated insurance companies to operate in any state, allowing interstate and state insurance companies to compete for the first time. Would you support or oppose this increased insurance competition?
  • Do you think that increased insurance competition would raise or lower consumer insurance prices?
  • Would you support or oppose allowing consumers the option to choose between state and interstate regulated insurance companies?

The results were strongly in favor of encouraging competition between state and federally-regulated insurance companies, with 76% supporting (14% opposing) competition between state and nationally-regulated insurance companies of consumers. The majority of consumers (73%) believe that this competition would lead to lower insurance prices. Most telling, however, is that 79% (10% opposing), including 78% of democrats, support giving consumers the option to choose between state and federally-regulated insurance companies. Clearly, consumers want choice and believe that choice will increase industry competition and lead to lower insurance prices.

Conclusion
The results of our survey of American consumers find strong support for creating choice between state and interstate-regulated insurance companies. A national framework for insurance, while providing a common solution of consumer protection, solvency and oversight, would provide that choice and be a significant benefit the public.

FOR A PDF VERSION OF THIS CONSUMERGRAM INCLUDING THE APPENDIX SURVEY RESULTS CLICK HERE.

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