"This is a perfect example of how business can take care of a societal issue," Karr said. "This can actually benefit the industry because the companies that perform the best for their customers will have the competitive edge."
Launched in January, ValChoice is an online analytics company that rates auto and home insurance companies on price, actual payments of claims by policyholders, and customer service. He wrote the algorithms that aggregate data on premiums on accident payment records, and he frequently commutes to the New York Public Library to read highly detailed government reports on the industry.
I decided to give ValChoice.com a test drive. For now Karr is offering his basic report on any one auto insurance company free to the public, a $9.95 value. The low-down on my auto insurer, a well-known one, is that it's barely above average. I found a comparison report more satisfying. For $29.95, it rated my company against Karr's three best auto insurers in California. They looked so much better, I almost called them immediately for quotes.
Just to be cautious, I called around for ratings of Karr's work. I found he's so new at this that he's barely on the radar inside or outside of the industry.
"I never heard of the guy. ... He sounds like a lone wolf," said Carmen Balber, executive director of Consumer Watchdog, the nonprofit group behind Proposition 103. But she likes the idea behind ValChoice.
"The concept is that this information he's providing would be incredibly valuable to consumers," Balber said.
Especially now.
In his latest report on the state of the auto insurance industry -- Karr has written for the Huffington Post -- he concluded that the publicly held companies, those traded on Wall Street, "overcharged" their own policyholders by $19 billion from 2011 to 2014. That translates to $243 per insurance policy.
Higher premiums account for some, Karr said, but so does the under-payment of claims for damages and medical expenses filed by accident victims. Karr said publicly held companies are more likely to screw their own clients because, as traded companies, their first duty is to please their stockholders, even if it means denying or delaying payments.
"Consumers have no idea of the level they're getting ripped off," he said. For example, he added, insurance agents for publicly traded insurers often talk accident victims out of filing claims, telling clients that the companies would cancel or hike their premiums. "That's crazy. It has to stop."
So far, the insurance industry hasn't taken much notice of Karr. The Insurance Information Institute in Washington, D.C. did not respond in time for this column.
Still, Karr appears to be attracting a fair amount of notice. Forbes Magazine last year described ValChoice as something akin to Carfax vehicle background reports, saying that Karr's company would help "consumers learn which insurance companies are best at paying claims" and more. Also last year, Karr won the top award and $10,000 from the New Hampshire Social Venture Challenge, a juried competition at the University of New Hampshire.
Silicon Valley can expect to see him again, in April, when he visits to meet with potential investors.
"If there's one place that can get behind an idea like this," Karr said, "this is it."
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