May 27 -- The Federal Insurance Office (FIO) of the U.S. Department of the Treasury (Treasury) is issuing this Request for Information (RFI) to solicit input by July 26, 2021 regarding FIO's future work relating to monitoring the availability and affordability of automobile (auto) insurance.
The U.S. personal auto insurance sector is a significant part of the U.S. economy, both in terms of its aggregate size and its impact on individual consumers and their economic well-being. In 2020, this line of business accounted for approximately $247 billion of direct premiums written, or about 35% of the domestic property & casualty (P&C) insurance sector's total premiums of $711 billion. Auto ownership is associated with greater opportunity for economic well-being, such as better access to employment opportunities. All U.S. states except for New Hampshire require a driver or owner of a motor vehicle to have auto liability insurance or financial security, which may be satisfied by auto liability insurance, when registering or while operating a motor vehicle. However, in 2019 nearly 13% of drivers in the United States were uninsured.
The domestic personal auto insurance business has been evolving throughout the 21st century. New consumer preferences and recent technological innovations—including the increased use of big data and artificial intelligence—have led to changes in nearly all aspects of the business, including availability of products, pricing, underwriting, distribution, claims adjudication and processing, and risk management. Additionally, developments in the sharing economy (such as ride-sharing and delivery services) and automation are likely to further reshape the business in the future. The COVID-19 pandemic accelerated some of these changes, such as an increased consumer preference for usage-based insurance and telematics, which could permanently alter the sector.
In 2020, the House Appropriations Committee recommended that FIO “examine the impact of non-driving related factors, such as a consumer's credit history, homeownership status, census tract, marital status, professional occupation, and educational attainment, on the affordability of auto insurance premiums for traditionally underserved communities.” President Biden also noted differences in personal auto insurance pricing in a televised Town Hall meeting on February 16, 2021.
Building upon its past work, FIO is issuing this RFI as part of a holistic analysis of the domestic personal auto insurance business, focusing on the following key themes:
(1) Affordability of coverage and premium pricing disparities—with particular attention to traditionally underserved communities and considering the impact of non-driving factors—including an analysis of available data and an update of FIO's past work on auto insurance, and
(2) market evolution and structural shifts in the conduct of business, including the effects of technology and the use of big data, as well as changes related to the COVID-19 pandemic.
FIO invites comments on:
Data Analysis (4 questions)
Non-Driving Related Factors in Personal Auto Insurance Underwriting and Pricing (2 questions)
Structural Market Changes in Personal Auto Insurance (5 questions)
General (1 question)
Request for Information notice in FR:
https://www.federalregister.gov/documents/2021/05/27/2021-11167/monitoring-availability-and-affordability-of-auto-insurance-assessing-potential-evolution-of-the