Despite recent rate hikes, most Americans find insurance rating factors fair

Although nearly half of U.S. home and auto policyholders said paying for insurance is becoming more challenging, most agree that the methods insurance companies use to determine rates are fair, according to a consumer survey from the Insurance Research Council (IRC).

Overall, consumers view rating factors such as the condition of a home, the cost to rebuild and the number of miles driven annually more favorably than methods that are tied to a policyholder’s personal profile, such as their education level.

“Given how inflation and other factors have driven up the cost of auto and homeowners insurance in recent years, the Insurance Research Council was not surprised to learn that paying for these essential coverages has been a financial burden for a sizable number of Americans,” IRC President Dale Porfilio said in a release. “Yet at the same time, consumers expressed widespread support in our survey for the fairness of the rating factors used by insurance carriers to price their auto and homeowners policies.”

When it comes to personal auto, 85% of policyholders believe it is fair to consider a driver’s previous traffic violations when setting rates, while 76% think reviewing claims history is fair. Around three-quarters also said it is fair to use data from telematics devices.

However, when it comes to the aforementioned education level, 45% said that was going too far. Further, 42% said gender should not be considered in personal auto rates, while 41% said marital status should be off the table. IRC noted that those three factors — gender, marital status and education — were the only ones out of 14 rating variables that didn’t garner a majority of support from survey respondents.

On the home insurance side, all 19 rating factors were deemed fair by “sizable majorities,” IRC reported. This included more than 80% of survey respondents saying that it is fair for insurance carriers to consider safety systems, like smoke detectors, a home’s overall condition and its size when determining insurance costs.

Slightly less than 40% of policyholders said using rating variables based on connected devices, such as security systems, was an unfair practice, IRC reported. Additionally, 38% said it was unfair that insurance carriers factored in the condition of surrounding buildings.

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