A Move to Halt the Premium Seesaw
Washington Post
September 8, 2002

With homeowners and motorists facing hefty insurance price increases -- 100 percent higher than a year ago and more in some cases -- dozens of consumer groups have banded together to try to get the attention, and perhaps even the assistance, of state regulators in toning down the feast-and-famine cycles that characterize the insurance business.

If left in its current state of business and regulation, the consumer groups say, insurance rates are doomed to carom from too low for the companies' long-term health when times are good to excessive when times are bad. And customers will continue to be yanked back and forth without warning.

. . .

[A]fter recording a loss of $5 billion in 2001, State Farm has "turned on a dime" and is now raising prices and refusing new business in many markets, said J. Robert Hunter of Americans for Insurance Reform, a coalition of more than 60 consumer and public interest groups that advocate regulatory changes.

Insurance is regulated by the states, and virtually all of them prohibit at least in theory rates that are either excessive or inadequate, yet the cycle continues, Hunter said in a letter on behalf of AIR to the insurance regulators in all 50 states and the District.

Regulators should use their authority to ease or break the cycle, Hunter said.

"Consumers have had enough," he said.

For a copy of the complete article, contact AIR.