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What does Bait-and-Switch have to do with Insurance?
Jeff Ryan - CLU, ChFC, AIA, CIC, CPCU
February 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
About the Author: Jeff Ryan has been a licensed insurance agent since 1978, later becoming a full-time insurance professional in 1983. Since then, he has been the principal of The Ryan Agencies with offices in Hornell, Jasper, and Wellsville. The agencies serve approximately 15,000 clients in New York and Pennsylvania. Jeff holds numerous credentials including the Chartered Property & Casualty Underwriter (CPCU), Certified Insurance Counselor (CIC), Accredited Advisor in Insurance (AAI), Chartered Life Underwriter (CLU), and Chartered Financial Consultant (ChFC) designations. He holds a Master's Degree from the American College. Jeff enjoys writing about all things insurance and welcomes your questions and feedback.
This article may have been originally published at Quora.com.
To see Jeff's Quora.com profile click here.
Factors You Can’t Easily Control These factors are built into your profile, but still play a major role: Your location: Claim trends, traffic, and weather patterns where you principally drive. Your age and driving experience: Especially for younger drivers. Other drivers in your household: Their age and driving history. The vehicle you own: Unique to the Year, Make, Model, and Sub-model’s damageability and cost of parts/labor. These factors significantly influence price differences, but they don’t tell the whole story. Factors You Can Control This is where habits and wise decisions can make a real difference: Your driving habits: Minimizing tickets and accidents can have a direct impact. Your coverage choices: Liability limits, deductibles, and optional coverages can vary widely. Your insurance consistency: Avoiding lapses in coverage. Your annual mileage: How much and how often you drive. Discount opportunities: Bundling, pay-in-full, NYS defensive driving course. Your Insurance Score (Yes—You Can Influence It) Insurance companies use a credit-based insurance score as part of their rating process. While it’s based on financial behaviors, it is not permanent—and it can be improved over time. Simple habits like: Paying bills on time Reducing outstanding debt Avoiding excessive credit inquiries… can positively impact your score—and in turn, your insurance rates. Your insurance score is under your control and a worthy mid to long-term project in and of itself. For more information on what you can do to positively influence your score, see: Great 8 Tip #8 - What's Credit Got to Do with Insurance? How Can I Improve My Auto Insurance Score Why Comparing Rates Doesn’t Work When someone says, “I only pay…” , the uniqueness of their fingerprint is missing. What are their: Deductibles Driving history Insurance score Household profile Coverage limits: what they may be giving up in terms of protection. Price without context can be misleading and discouraging.
Part 7 – Designing a Value-Driven Insurance Plan
Part 6 – Advice, Advocacy, and Answers
Part 5 – Can Your Company Deliver?
Part 4 – Custom Coverage = Real Protection
Part 3: Coverage Limits - "The Ceiling You Don't Want to Collapse"
Part 2 – The Risks of Chasing Cheap
Part 1: What Are You Really Paying For?
Insurance fraud is a significant problem, exceeding $300 billion annually, with the Property and Casualty sector contributing nearly $50 billion to that total.
Living in New York, you might have a stack of insurance documents—auto, homeowners, health, or life insurance policies—filed away somewhere. But how long should you keep those documents, and specifically, what papers should you hold on to?
