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What does Bait-and-Switch have to do with Insurance?
Jeff Ryan - CLU, ChFC, AIA, CIC, CPCU
Feb 20, 2024
What does Bait-and-Switch have to do with insurance? And why has it recently been in the news?
Who knew that Insurance companies could “bind” coverage without having all the information necessary to rate a policy accurately?
While most companies do not use a Bait-and-Switch strategy, it has been a strategic practice by a minority of carriers. The guilty companies would purposely implement a policy
without running the household driver's Motor Vehicle Reports (MVR). An MVR is one of the essential factors in developing an accurate insurance rate. This practice would assume a clean record on the original policy term only to run the report and adjust the rate before the next renewal.
In many cases, this would significantly change the premium charged to the policyholder. The practice was successful because the vast majority of competing companies would not offer a policy without first running all necessary reports, including an MVR.
With this practice, some insurance shoppers made decisions based on inaccurate information. They became stuck with a company and in some cases, ultimately caught with a less attractive insurance carrier than the company from which they switched.
The Professional Insurance Agents (of which The Ryan Agency is a member) have fought this practice for years. On December 26th, 2023,
the governor signed S.5764B, with an effective date of June 2024, takes aim at these harmful practices.
Until then, insurance shoppers should ask their agent or company representative if the auto insurance quotes they received were rated utilizing Motor Vehicle Reports for all licensed drivers in the household.
At the Ryan Agencies, any
final quotes provided to our clients consider all available rating factors. Before you decide to switch companies, our agency wants quotes provided to you to be as accurate as possible
For more information on what rating factors influence car insurance rates, see our previous blog posts here:
- What are the Major Factors that Determine What I Pay for Car Insurance?
- What Factors Make Car Insurance Expensive?
- Top Five Factors That You Control When Looking to Reduce Your Auto Insurance Rates
- What Determines the Cost of My Car Insurance
This article may have been originally published at Quora.com.
To see Jeff's Quora.com profile click here.
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