Consumer Watchdog Petitions CA Insurance Commissioner to End Job-Based Auto Insurance Price Discrimination By GEICO and Progressive

By a News Reporter-Staff News Editor at Insurance Weekly News -- Consumer Watchdog has petitioned the Department of Insurance to reject GEICO's and Progressive's use of occupation in setting auto insurance rates. The challenges seek to stop the insurance companies from giving discounts to drivers who are employed in elite professions such as lobbyists, lawyers, and bankers while surcharging drivers who do not meet the companies' selective criteria, including those in less-skilled or non-professional occupations. Such discriminatory pricing results in lower-income drivers paying more and is unlawful under California's landmark insurance reform law, Proposition 103.

GEICO's proposed rate increase would overcharge people because they are in less elite professions, those who have lost jobs or are otherwise unemployed, students and retired people, by $10 million. Progressive overcharges those in non-professional occupations by $8 million.

"Progressive and GEICO want to attract customers who they deem desirable by adding a person's occupation into the equation, giving breaks to the wealthy while squeezing out those less economically advantaged by charging them more. They are trying to get around the reforms of insurance reform Proposition 103 that require that auto insurance premiums be based primarily on a driver's safety record, the number of miles they drive annually and the number of years they've been driving," said Consumer Watchdog staff attorney Jonathan Phenix.

A recent Consumer Federation of America report reviewed premiums in 15 cities nationwide and found that GEICO and Progressive overcharge drivers of lower economic status by 92% and 80%, respectively, the worst record of the companies reviewed.

In December, New York state insurance regulators called on four insurers including GEICO and Progressive to explain why rating a person based on their occupation should not be prohibited.

Prop 103 also requires insurance companies to set premiums based primarily on a driver's safety record, annual mileage driven, and years of driving experience. Any additional factor must be adopted by the Commissioner by regulation after a public hearing and then only if it can be proven that it is "substantially related" to a driver's risk of getting into an accident. Occupation has never been adopted by regulation as a rating factor and has never been shown to be related to risk.

Consumer Watchdog Seeks Public Hearings on GEICO and Progressive

Under the voter-approved Proposition 103, insurance companies like GEICO and Progressive must justify their auto, home and business insurance rates and practices. Consumers have the right to request a public hearing before the Department of Insurance to challenge illegal practices or excessive rates.

In the HYPERLINK "https://consumerwatchdog.nationbuilder.com/r?u=http%3A%2F%2Fwww.consumerwatchdog.org%2Fsites%2Fdefault%2Ffiles%2Fimages%2F2017-01-23_cwd_petition_for_hearing.pdf&e=368d371a6570b4f01ec72ec57d4136d0&utm_source=consumerwatchdog&utm_medium=email&utm_campaign=jobinsurancedis&n=2&test_email=1" npetition filed against GEICO, Consumer Watchdog challenged the company's application for an overall rate hike of 4.9%, or $11 million. Consumer Watchdog's analysis found that GEICO is proposing a rate decrease or modest overall rate increases of between negative 0.4% and 2.2% for the elite occupations that the company prefers, including: dentists, "white collar" contractors, scientists with masters degrees and members of university alumni associations. But GEICO wants to raise rates for drivers not employed in one of those occupations by 11.5%. In addition to challenging GEICO's occupation-based discrimination as unlawful, Consumer Watchdog's analysis concludes that GEICO has failed to support its proposed rates and that all of the company's 150,000 policyholders are actually due for an overall rate decrease.

In a HYPERLINK "https://consumerwatchdog.nationbuilder.com/r?u=http%3A%2F%2Fwww.consumerwatchdog.org%2Fsites%2Fdefault%2Ffiles%2Fimages%2F2016-07-11_cwd_petition_for_hearing_re_file_nos._16-2883_16-2884_16-3001__16-3002.pdf&e=368d371a6570b4f01ec72ec57d4136d0&utm_source=consumerwatchdog&utm_medium=email&utm_campaign=jobinsurancedis&n=3&test_email=1" npetition filed against Progressive in July 2016, Consumer Watchdog called out the insurer for overcharging people who aren't in preferred professions, including bankers, doctors, engineers and lawyers. Consumer Watchdog also challenged several procedures the company is using to deny some good drivers a 20% discount that they are entitled to receive under law. Progressive has made early moves to fix some of its good driver discount procedures, but not on its use of occupation in insurance ratemaking.

Consumer Groups Have Requested Regulation to Enforce Proposition 103 Ban on Illegal Rating Factors

Keywords for this news article include: Consumer Watchdog.

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