Data Shows Insurance Companies Use Occupation, Education to Segregate, Overcharge Communities of Color, Lower Wage, Less Educated
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- Insurance Lobbyists Stonewall, Watchdog Calls for Subpoenas
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An analysis of new data obtained from insurance companies by the
However, many insurance companies refused to provide the data sought by the Department. Consumer Watchdog urged Commissioner Lara to force the remaining auto insurance companies to respond.
"We were troubled to learn that only 33 auto insurance companies provided the requested data - about one third of the 95 insurance companies that CDI surveyed. It was even more appalling that all but one insurance industry executive in attendance at the
Read Consumer Watchdog's TESTIMONY (https://consumerwatchdog.nationbuilder.com/r?u=s8Ljare7_UNlTgDbeqWiVMgAvuunUCNTNB7fkVHlUC88eH4pu4oJ5SDtaJDcNLWpUuqPeQj2OYRim4rxky5Y_CkIcLwOQefKbabz9NF2DdrEWE4a4eJ5zfrrGt9O2ADb_a4M877HOeKgFVMCMh3UGkvTDbDx_05FFkmwZbWtLWU&e=781cfc0d0d563d87ea89d97e791f5e7a&utm_source=consumerwatchdog&utm_medium=email&utm_campaign=pr_cdi_affinity_groups_discrim&n=4&test_email=1) and LETTER (https://consumerwatchdog.org/sites/default/files/2019-09/CWDLettertoLaraandHenleywithexhibits.pdf) to Commissioner Lara.
In formal testimony submitted to the Commissioner last Friday, Consumer Watchdog presented online comparisons showing surcharges of up to 14.31% on drivers who are not in one of insurers' preferred professional occupations (like doctors, lawyers or engineers) or who attained a college degree, which supports CDI's findings that lower income drivers and those with lower educational attainment are likely to be charged higher premiums.
"Just because a person doesn't have an advanced degree or a 'professional' job doesn't mean they are bad drivers," said
"The voters passed Proposition 103 to stop this kind of discrimination based on income or race. Now that the
Insurance Companies Stonewall, Press for Permission to Continue Illegal Surcharges
For the investigatory hearing, CDI asked 95 of the 168 insurance companies actively selling personal automobile insurance in
Invited by CDI officials to respond to the damning evidence of discrimination, only one of the dozens of industry lawyers and executives at the hearing did so. Two industry lobbyists and other supporters testified, but did not address the CDI analysis. Instead they urged the Commissioner to continue to allow insurance companies to segregate people into groups based on their education and occupation.
The data collected from these 33 companies showed that:
* Drivers in "affinity" discount programs tend to live in ZIP codes with higher average incomes. Those drivers are more than twice as likely to receive special discounts (55% of drivers in the highest per capita income ZIP codes compared to 26% of drivers in the lowest per capita income ZIP codes).
* Drivers who reside in ZIP codes with lower average educational attainment are more likely to not qualify for "affinity" discounts. In ZIP codes with the lowest average education attainment, 72% of drivers do not receive an "affinity" discount. By contrast, only 44% of drivers residing in ZIP codes with the highest average education attainment do not receive an "affinity" discount.
* Drivers who reside in predominately minority ZIP codes are less likely to qualify for "affinity" discounts compared to those who live in ZIP codes with a predominately white population. Only 29% of those in predominately minority ZIP codes receive discounts as compared with 47% of persons living in ZIP codes with a predominately white population.
Though drivers enrolled in "affinity" marketing plans receive premium discounts that range from 1.5% to 25.9%, those who do not qualify must subsidize, through higher rates and premium surcharges, those who do.
Consumer Watchdog Urges Commissioner to Subpoena Data, Impose Moratorium Until Investigation Over
Under Proposition 103, insurance companies must obtain agency approval for their rates and premiums and premiums must be based primarily of three mandatory factors - driving safety record, annual mileage, and years driving experience. The Commissioner can adopt other optional rating factors by regulation that have less impact on premiums than the three mandatory factors, but occupation and education have never been adopted as rating factors.
In its testimony, Consumer Watchdog noted that the Department has allowed insurance companies to use occupation and education for years in violation of voter-approved Proposition 103 and that consumer advocates have repeatedly urged the agency to ban the practice. The non-profit called upon the agency to issue a moratorium on further approvals of occupation-based "affinity" discounts until the agency completes its investigation and issues a regulation stopping the unlawful overcharges. It further urged the Commissioner to force the remaining auto insurance companies to submit their data and disclose all data to the public, as the law requires.
Read Consumer Watchdog's TESTIMONY (https://consumerwatchdog.nationbuilder.com/r?u=s8Ljare7_UNlTgDbeqWiVMgAvuunUCNTNB7fkVHlUC88eH4pu4oJ5SDtaJDcNLWpUuqPeQj2OYRim4rxky5Y_CkIcLwOQefKbabz9NF2DdrEWE4a4eJ5zfrrGt9O2ADb_a4M877HOeKgFVMCMh3UGkvTDbDx_05FFkmwZbWtLWU&e=781cfc0d0d563d87ea89d97e791f5e7a&utm_source=consumerwatchdog&utm_medium=email&utm_campaign=pr_cdi_affinity_groups_discrim&n=4&test_email=1) and LETTER (https://consumerwatchdog.org/sites/default/files/2019-09/CWDLettertoLaraandHenleywithexhibits.pdf) to Commissioner Lara and the


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