Post Office Zip Code Change Prompts Insurance Industry Attempt to Jack Up Rates

:grr: I'd be so pissed. Can the hc industry stoop any lower for the almighty dollar? :grr:

http://www.openleft.com/diary/15250/post-office-zip-code-change-prompts-insurance-industry-to-jack-up-rates

Post Office Zip Code Change Prompts Insurance Industry Attempt to Jack Up Rates
by: David Sirota
Thu Sep 24, 2009 at 20:20



I'm really glad Republicans and Democrats in Washington are so intent on protecting the insurance industry when I read stories like this from the Longmont Times-Call newspaper:



Yes, you read that right - the Post Office in Longmont, Colorado made a routine change to zip codes, the kind of change that happens all the time. And yes, the result was that insurance companies are trying to use that change - and that change alone - as a justification for jacking up their policyholders' insurance premiums.

This is the same insurance industry that Washington politicians are going out of their way to tell us "provide a legitimate service," are run by "not bad people" and are therefore worthy of legislative protection and taxpayer handouts.

I love the smell of "democracy" in the morning...it smells like...money.

That the fact that this person now lives in a different zip-code that they are a much higher risk. I suggest they move.

30315-Atlanta Federal Penitentary
81226-Supermax in Florence, CO.
66048-Leavenworth
62959-Marion, IL

These bastards need to be in one of these facilities.

between two rate areas that have at least a 10% difference.

I can understand it to a degree with car insurance, but why with health insurance?

I've listened to these guys talk. You know the saying "Correlation is not causation."? Insurance companies don't seem to care whether there is causation to the correlation- they are like some people on this board. If one of their bean counters discovers that people who have high auto insurance rates also have frequent or costly medical claims, then it's good enough for them. Might have to do with the average price of homes, ie that if you live in Gatedville you are much less likely to smoke than if you live in Slumnearby.

I've worked in IT for insurances companies. I helped implement what was called "matrixing" for Nationwide and part of that was a zip-code look-up that would be a part of determining your rates. They have an index of zip-codes that gets cross referenced to see how many accidents occur in a given zip, more accidents, higher rates. If the post office changes your zip, you get a new rate when your policy renews. I'll try to explain this as best I can.

Policy comes into system for renewal/change/new business - on the file is the policy holders zip - system does a look up with the post office for their zip and finds zip-1 - system looks up zip-1 on internal table to see how many accidents - zip-1 has 2 accidents in the last x number of years and gets a low factor for use in rating.

Policy comes into system at next renewal/change - system does look up again but now has zip-2 - system looks up zip-2 on internal table and it is either new (no history exists) or is recycled and perhaps was an area that had 30 accidents in x number of years and now gets a higher factor for use in rating - rates go up.

This issue is well known and could be fixed but will not be because the statistics show that in the overwhelming number of cases, the rates will go up and only on rare occasion is a zip recycled so that rates go down (even then, accidents occur enough to correct in a term or two).

Just one more reason why insurance companies suck.