Twenty years ago, consumer advocate J. Robert Hunter studied insurance rate filings in the District of Columbia and found that, other things being equal, the same consumer could pay as little as $350 or as much as $900 a year for the same coverage from different companies.
Comparative shopping for auto insurance is a good way to save significant money every year. But how do you go about getting reliable information to comparison shop? For years we have been urging state insurance departments to provide such information to the public. There is no question that the data exists, but state insurance departments have yet to put it into an understandable format that can be easily accessed and distributed. While some departments have made efforts in this regard, it clearly is not a high priority. With the availability of the Internet, it is even more inexcusable not to have this information at the touch of the consumer’s fingers.
Now comes the Progressive Insurance Company out of Cleveland, Ohio — the sixth or seventh largest auto insurer in the nation — with a new study that shows drivers could be saving an average of $481 every six months on auto insurance “if they took the time to compare rates.” The study adds that “the same driver could receive a quote of $1,256 for a six-month auto insurance policy from one company, and a quote of $775 for the identical policy from another company.”
If you live in Kentucky or Texas, the average six-month variance is over $700. In New York and Vermont, the average six-month variances were narrower than other states — averaging $192 and $210 respectively. Progressive Insurance Company also commissioned a study that found, based on interviews with 1,800 drivers, that a majority of drivers were not aware of how wide the price variances are in their community.
Progressive started publicizing a comparison of its rates with those of the top three competitors in each market a few years ago. Sometimes, Progressive did not come out too well in these rankings, but its CEO, wavemaker Peter Lewis, just expanded the areas of the country reached by the comparisons (accompanied, of course, by Progressive’s toll-free telephone number).
What Lewis sensed earlier than most of his peers is that new technology is making comparative data services inevitable, so why not gain the first credibility for his company? Although Progressive is on the right track by offering comparisons on its Web site www.progressive.com., the information could be greatly expanded. Send Progressive an e-mail asking that the company expand its list of companies from the top three to the top ten auto insurers. (Smaller companies may have a better deal and should not be left out.)
Indeed Internet technology will soon make price, service, and quality comparisons available for many other products — autos, home appliances, clothing, housing, furniture, food, health care — and services — banking, home repair, transport, communications, medical, dental, rentals, hotels etc.
These comparison shopping futures won’t come without problems; they will come with the usual assortment of deception, fraud, error as well as accuracy. They won’t come into being online quickly either, until consumers begin to demand such information from government, business, and nonprofits that could collect such information as part of their overall missions.
Most folks realize that shopping around usually will produce a better deal than going for the first “do I have a deal for you” smiling insurance agent. It takes informed, aggressive consumers to make competition more effective. The best are brought forward, and the worse are driven out by a tough, intelligent selection process by consumers. Saving your consumer dollars is equivalent to getting a raise at your workplace. Comparison shop and give yourself a raise.