Current Problems in the Availability of Insurance
Highlights
GAO discussed its 1979 report on issues and needed improvements in state regulation of the insurance industry. GAO found that insurance availability was affected by: (1) redlining, which is the arbitrary denial of insurance to everyone living in a particular neighborhood; (2) subjective underwriting practices which could result in consumers being denied essential insurance because of unsubstantiated judgments; and (3) limited state protection to consumers who had adverse underwriting decisions. GAO also found that state insurance departments: (1) lacked sufficient information to regulate the industry effectively; (2) had limited authority to act on consumer complaints; (3) did not have systematic complaint handling procedures; and (4) needed to substantially improve their market conduct examinations of trade practices. GAO analyzed automobile insurance regulation in more detail and found that: (1) state departments had not evaluated the risk classification system to determine if its use constituted unfair discrimination; and (2) insurance costs did not vary noticeably between states that required prior approval of insurance rates and those that did not.