Consumer watchdog says some auto insurers discriminate

Apr 3, 2014

A public watchdog group is charging that several large auto insurance companies discriminate against minority and low-income customers.

The New York Public Interest Research Group, or NYPIRG, says it analyzed the billing practices of the five largest auto insurers in New York by getting quotes based on different customer profiles.

"Auto insurance rates should be based on how you drive, not who you are," said NYPIRG consumer advocate Andy Morrison.

Morrison said NYPIRG found that three of the state’s top five insurers charge more to those without college degrees or with lower paying jobs – in some cases by nearly 20 percent. Asking such questions is legal, though.

The report used online rate quotes from the companies and found that rates were hundreds of dollars more for drivers with a high-school education and a non-professional job compared to college-educated professionals.

NYPIRG says Geico and Progressive were the most egregious. At the other end, State Farm did not use education or occupation in its pricing. Liberty Mutual asked questions about education, but not occupation. And NYPIRG could not obtain quotes from Allstate.

The practice targets vulnerable populations, Morrison said, "including those protected by state and federal civil rights laws. And members of those communities are already struggling to get by in the current economic climate. So this is just another example of how extremely expensive it is to be poor."

In a statement, the New York Insurance Association (NYIA), an industry group, countered that the pricing system for insurance is transparent.

"These factors are correlated with risk, which is why regulators have allowed the use of education and occupation in determining how much a consumer pays for insurance," NYIA president Ellen Melchionni said. "Companies are only allowed to use factors that are predictive of loss. Never once does NYPIRG concede that there is not an association with risk."

The NYIA also notes there are 60 insurance companies working in the state providing coverage in a "vibrant" insurance market.