Because mandatory auto insurance is working so well?

I have always fought against energy industry attempts at forced-purchase laws, because I think one of the most important aspects of fair markets is for the consumer to have the right to say "no thanks". It's hard to jack consumers too hard when they have the ability to walk away and not purchase at all.

So naturally I am anxious about the passage of mandatory health insurance laws, and this week I received a good reminder about how well mandatory auto-insurance is working out. Check this out:

Despite a perfect payment history and a 791 credit score, Chase Bank decided last month to lower the credit limit on one of my charge cards to a level just slightly above the balance I have on the card. Holding a balance close to your limit is seen as risky by the industry, so rating agencies responded by lowering my credit score. My automobile policy holder, Travelers, noticed this and decided to jack the premium on my auto policy by 17 percent, despite our seven-year history together with no claims or traffic violations. They sent me a very nice letter explaining that this is accepted industry practice but they can't tell me how or why they did it, because the methodology by which they determine auto risk based on consumer behavior is a secret.

It's bad enough that borrowers who don't pay and drivers who have accidents must suffer abuses from shifty creditors and insurers, but now even those with perfect records are apparently fair game for punishment too.

The market for products that are mandated by law or non-discretionary simply cannot be entrusted to profit-driven providers. Mandatory, for-profit health insurance will be a disaster for consumers -- largely for reasons that aren't discussed in debates or reported on the nightly news.

For a better understanding on how we can help one another learn to end the cycles of abuse that pervade our society, check out Pedagogy of the Oppressed by Paolo Freire.

Comments

[Anita]

Mark,

Well put... and startling new insight into the machinations of all of this... I recently sent a large payment $2,400 via electronic BANKING to Citicards - it was an electronic payment... they under some odd ball secret clause did not process my payment - and made up something about how it was an unusually large payment and we had to call the bank to confirm that it was any good???? So we got on the phone with my bank and they affirmed that the payment had CLEARED their books 10 days prior... In the mean time they had discontinued my charging privileges, charged me $120.00 for being over my limit and $150.00 for a late payment [ none of which was true since they were holding onto my less than believable CASH direct from the bank ... all this because they "could not believe that I was sending them such a large payment" - more like trying to suck as much money outta me as they could flabbergasted that one of the plebeians had actually PAID her debt - and furious that they would not get another day of [interest] slave labor from me -- they whipped me and beat me and got their pound of flesh anyway. I forgot to mention that they had just - under very similar circumstances to yours - received a notice that after a robust and on time great relationship for 20 years they were for no apparent reason jacking up my interest rate from 14% to hold on 29.9% - yep folks 30% interest!!! So, I bet they are po'ed that I paid my bill... in full ... cause 30% of $20 is not at all like 30% of $5,000!!!

... and so all of us that are trying to reduce our debt , get outta the woods, keep our houses, and become debt free... I fear we are now becoming enemies of the state... so from now on... watch your back... cause anybody who is debt free, pays their credit cards off monthly and actually owns their house free and clear... is an ENEMY OF THE STATE!

I would say get a new credit card and a new insurance company... and they are all the same... maybe the capulin coop needs to start offering a new insurance plan and a new credit card scheme... wanna?

[Mark]

Wow, that's a tragic story, Anita! Let me get this straight: First the banks destroy their own credibility, then they leverage that lack of credibility to lengthen the delay on crediting electronic transfers to customer accounts? Brilliant! I always have wanted to be the guy who receives electronic bank transfers instantaneously but doesn't have to clear them on the other end for a few days. The longer the delay between these two events, the bigger the pile of money in the revolving account. What fun! And yes, cooperatives are clearly the best model to stem the four largest economic leakages from every community: interest, insurance, food, and energy. Now to overcome the propaganda that prevents this....