Pressure Groups Try To Get Insurance Commissioner To Further Restrict Auto Premium Criteria

Various community groups in California have petitioned state insurance commissioner Ricardo Lara to prohibit the use of occupation and education as factors in setting auto insurance premiums.

According to these community organizations – which represent consumers, low-income workers and communities of color – many auto insurers operating in California charge lower-income and less-educated drivers up to 15% more. By charging those customers higher premiums, insurers can give discounts to doctors, lawyers, other well-paying professions, and drivers with college degrees, the groups claim.

The groups also argue that the surcharge is illegal under Proposition 103 – California’s insurance reform law.

“These unfair surcharges drive up the cost of insurance for people who can least afford it,” the groups’ petition read. “They also skirt civil rights protections to allow insurers to charge non-white, lower-wage drivers more.”

The organizations that signed the petition to insurance commissioner Lara include: United Policyholders, Public Advocates, Presente.org, Neighborhood Assistance Corporation of America, La Casa de la Raza, KIWA (Korean Immigrant Workers Alliance), Courage Campaign, Consumer Watchdog, Consumers for Auto Reliability and Safety, Consumer Federation of America and Consumer Action.

News of the petition comes as Consumer Watchdog released the results of its latest study, which found that seven out of California’s 10 major auto insurers overcharge drivers without college degrees or higher-paying professions.

Based on an analysis of online premium quotes, the study discovered that the surcharges at Farmers, GEICO, Progressive, AAA, Allstate, Liberty Mutual and Mercury range from 3.5% to 14.7%, based on a customer’s occupation and education level.

On the other hand, the study found that State Farm, USAA and AAA Northern California do not use education or occupation as rating factors.

What do you think of the use of education and occupation in determining premiums? A fair assessment of risk or a misplaced judgment? Leave a comment below with your thoughts.