New York Bans Car Insurers From Charging More Based on Education, Jobs

by | December 15, 2017

By Brian Nearing

The state is barring insurance companies from charging more for drivers based on their occupation or level of education, under rules announced Wednesday by the state Department of Financial Services.

A "multi-year investigation" found some unidentified insurance companies have been using such factors as whether a person lacks a college degree or works in a low-paying job to charge more for auto insurance, according to DFS Superintendent Maria Vullo.

Two major insurers -- Liberty Mutual and Allstate -- agreed already to stop the practice, she added. But a the head of the state's insurance industry blasted the move, saying it could lead to higher premiums.

"New York drivers who do not have a college degree or a high-paying job should not be penalized in the form of higher auto insurance rates," said Vullo. "This regulation requires insurers to openly justify the use of education and occupation data in setting rates, ensuring that New Yorkers are not unfairly discriminated against and being charged higher rates due to factors outside their control or unrelated to driving ability."

The rules also require that unemployed drivers cannot be assigned higher-risk premiums, and that being a "homemaker" be considered a "neutral factor" in assessing risks and premiums.

A spokesman for the state insurance industry lobby warned the new rules could increase the cost of car insurance.

"The state ... is traveling down a dangerous path by introducing subjectivity into insurance," said New York Insurance Association President Ellen Melchionni.

When measuring risk, companies consider many factors including a person's driving record, type of car driven, annual mileage, and the driver's age and gender, she said, adding that "a person's education and occupation have been mathematically proven to be correlated with risk."

Melchionni said studies done in New Jersey and Maryland examined educational and occupational factors, and "concluded that eliminating specific underwriting factors would only result in increased rates for drivers."

The new state rule gives insurers 180 days to comply, unless a company can prove to the state that those factors are linked to increased risks. Attempts to contact Liberty Mutual and Allstate for comment were not successful.

DFS spokesman Ron Klug could not indicate how many drivers may have been affected by higher premiums because of educational or occupational status, or how much more those premiums might have been.

Results of the department's "multi-year investigation" are considered confidential and will not be publicly released, Klug added. The proposed rules were first announced by the state in May 2017.

(c)2017 the Times Union (Albany, N.Y.)