Geico, Liberty Mutual and Allstate announce Agreement to Eliminate Use of Occupation, Education as Insurance Rate Considerations

(New York, NY – Insurance News 360) – To comply with New York’s regulation that prohibits use of occupational status and educational level in considering an individual’s automobile insurance rates, three of the larger automobile insurance companies in the state have pledged not to use those factors. Geico, Allstate, and Liberty Mutual provide almost half of the private automobile insurance in the state  of New York.

“The use of education and occupation in determining insurance rates unfairly penalizes drivers without college degrees or who work in low-wage jobs or industries without having a rational relationship to driving,” said Superintendent Maria Vullo. “The result is that drivers with higher education and income pay less for auto insurance with no rationale evidence that they are better drivers.  We are pleased that GEICO has recognized its responsibilities to immediately comply with this regulation and we expect any other company that may be utilizing education and occupation in their underwriting to immediately agree to comply before the effective date of the regulation.”

During a multiple-year investigation, the state revealed that many insurers in the stae have, at one point, used education level and occupational status to determine what their insurance rates would be, without clearly showing how these factors were related to their driving. This skewed many  insured individuals’ rates from the start, whether there was truly more risk or not.

Under the DFS regulation, which was finalized in December 2017 and made effective this month, private passenger auto insurers are prohibited from using drivers’ occupational status or education level as a factor in initial tier placement unless the insurer demonstrates, to the satisfaction of the Superintendent of Financial Services, that its use of occupational status or educational level attained in initial tier placement or tier movement does not result in rates that are excessive, inadequate, or unfairly discriminatory.

The final regulation can be found here.

Source: New York State Department of Financial Services.

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