The American Automobile Association Urges State Lawmakers to oppose Kansas’ Self-Insurance Decision
The American automobile Association is an organization of about 700,000 members from all states. It was founded in 1914. Its mission is to strengthen the American automobile industry through educational programs and group projects. One of its most important activities is the “Australians do it Better” program, which brings together Australian car owners and their auto insurers. Through this program they can share information on saving on car insurance in the united states.
The Association has been very successful in promoting driver education in recent years: In response to the increasing number of traffic accidents resulting in fatalities, the Insurance Industry Research Institute recently held a workshop in California. A whopping survey of participants showed that most policyholders blame themselves for accidents rather than the insurance companies. Incredibly, nearly half of all policyholders said that they did not know enough about their own insurance policies or practices to have prevented an accident from happening.
Not only are people’s opinions about their own auto insurance policies being questioned: there are more serious issues at play as far as the Association’s ability to help car insurance payers. Recently, the Arkansas Times-Miner published an article saying that the American automobile association was no longer effective in its efforts to protect policyholders. According to the article, the association had lost or is losing its “firewall”. The paper noted that the previous year saw a 20% drop in premiums paid by policyholders in Arkansas. One of the reasons cited was that many policyholders were reducing their insurance due to rising deductibles and out of pocket expenses. This erosion of the Association’s clout is worrisome because in the past years the organization consistently had the backing of state insurance regulators and their members.
In Kansas the story is quite similar: Policyholders are turning to other, more affordable insurance alternatives because the AMEA has been unable to keep up with the cost of premiums. Some of these policyholders are turning to companies in the individual or group policies category. Policyholders who belong to associations, clubs, or other entities are looking to self-insure by choosing plans that do not include the AMEA as a coverage component. They are doing so, the thinking goes, to avoid paying premiums that are higher than they would pay if they took out individual policies.
Many lawyers and consumer advocates are concerned about this trend: They fear that self-insuring can put both the insurance industry in the wrong hands and might make policyholders’ insurance policies less effective in the event of a crisis. Many automobile associations have raised concerns with the State of Kansas Insurance Division regarding the impact of self-insurance on the Association’s portfolio of coverage for policyholders.
As the AMEA looks into these concerns and others: the question becomes whether its role as an independent governing body is worth the sacrifice of some perceived flexibility. The AMEA is working hard to save face in the eyes of policyholders and insurance regulators alike. If it fails to take a strong stance on the issue, it will be difficult for it to continue the existence that it has enjoyed for so many years.