A growing trend in the personal auto insurance market is bait and switch. When insurance carriers practice bait and switch, it means that they are running motor-vehicle reports after binding auto policies, and changing the premium rate of the policy. Often, the policyholder’s premium increases substantially shortly after it is bound. In many cases, the policyholder doesn’t know that the policy premium could change after it is bound.
Colloquially, this issue is called bait and switch. And, PIANY is aware of how damaging bait and switch can be to producers, and is committed to addressing it. The association is advocating for the state Senate and state Assembly to pass S.3578 and A.1809, respectively. These important bills would prohibit insurance carriers from re-rating policies when they run an individual’s MVR after the policy is bound.
Currently, carriers are permitted to change the terms—including the premium—of a policy within the policy’s first 60 days. In practice, this has allowed some carriers to delay running MVRs before the policy is bound, with the understanding that they can make changes to the policy after the applicant already has committed it. While the aforementioned legislation does not get rid of the 60-day free-look window, it would require carriers that utilize MVRs to rate auto policies to run those reports before the policy is bound. Additionally, those carriers would be required to verify the driving history on all named-drivers listed by the applicant.
Advocating against bait and switch is important because intentionally disregarding driver history information in order to present a false price to a customer undermines the credibility of the insurance industry altogether. Responsible insurance agents and companies utilize all available underwriting resources before binding a policy. These bills would ensure that all entities are acting responsibly and preserve consumer trust in the insurance industry.
Bait and switch is one of PIANY’s 2021 legislative priorities. You can track these and other bills with the PIAdvocacy bill tracker.
Bradford J. Lachut, Esq.
Bradford J. Lachut, Esq., joined PIA as government affairs counsel for the Government & Industry Affairs Department in 2012 and then, after a four-month leave, he returned to the association in 2018 as director of government & industry affairs responsible for all legal, government relations and insurance industry liaison programs for the five state associations. Prior to PIA, Brad worked as an attorney for Steven J. Baum PC, in Amherst, and as an associate attorney for the law office of James Morris in Buffalo. He also spent time serving as senior manager of government affairs as the Buffalo Niagara Partnership, a chamber of commerce serving the Buffalo, N.Y., region, his hometown. He received his juris doctorate from Buffalo Law School and his Bachelor of Science degree in Government and Politics from Utica College, Utica, N.Y. Brad is an active Mason and Shriner.
