San Antonio Express-News David Hendricks column [San Antonio Express-News]

July 27--Some automobile insurance companies began to cross the line about a decade ago when they started factoring the credit scores of drivers into insurance rates.

The lower the credit score, the higher the auto insurance premiums, including for liability insurance, which is required for drivers by law in most states.

Now, insurance companies are factoring in drivers' education levels and their occupations into auto liability rates, heaping more discrimination into the equation and adding to the financial burden of living with a low income.

The issue of education and occupation was raised a few days ago by the Consumer Federation of America, which studied the nation's top 10 auto insurers and rates charged in 10 different cities, including Houston. GEICO, Progressive, Liberty Mutual and Farmers are among the insurers that factor in either education and/or occupations into their rates.

Some insurers won't even offer online quotes for liability insurance if someone checks the box that they have only a high school education. Check a box to indicate a higher education level, and a quote is delivered.

That skirts the law. States generally prohibit denying auto insurance based on occupation and education.

However, no state known to the federation prohibits insurers from differentiating their rates based on those factors.

Some people are being quoted ridiculous rates, like $4,182 (Travelers in Baltimore) a year just for liability insurance, based on their jobs and education levels, even with a good driving record.

CFA Executive Director Stephen Brobeck singled out San Antonio-based USAA for praise, noting it doesn't factor occupation and education into its premium rates.

"In effect, auto insurers are discriminating on the basis of income and race. States should prohibit the use of these demographic factors that bear no logical relation to insurer risk," said J. Robert Hunter, CFA's insurance director and a former Texas insurance commissioner.

Using such factors to deny or increase interest rates when giving credit is against the law. Why isn't it against the law for an insurance product people must buy to drive legally? Hunter asked.

With credit scores, the insurance industry argued there was an actuarial connection between low credit scores and risk of claims. Some people put it more plainly: drivers with low credit scores usually don't have the money to keep their cars in good working order and thus have more accidents.

By using education and occupation, the insurance industry is tying low education and low-paying jobs into the same ill-spirited logic. What's next? Actuarial data showing left-handed or red-haired drivers are better or worse risks?

It doesn't matter how much hard data can be cited to justify setting rates this way. It's discrimination. It's inhumane, too. It lumps consumers into categories they often do not deserve.

The Property Casualty Insurers Association of America responded to the consumer federation by saying state laws require insurance rates be set with actuarial data.

"We continue to support, as we always have, the use of actuarially justified rating factors. Education and occupation are such factors," said Alex Hageli, association personal lines director, in a prepared statement. "We have full confidence in state agencies to ferret out any inappropriate use of rating factors as alleged by CFA,"

That's baloney. Insurance lobbyists usually prevail over consumer interests. Keeping auto rates artificially high for low-income groups only ensures more people will be driving without insurance.

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