Do Insurers Engage in Odious Discrimination?

by Jeff Sovern

Auto insurance rates vary depending on a multitude of factors. Many consumers probably expect and would not be troubled by the notion that those with a history of accidents or speeding tickets pay more than those with better driving records. But what about paying different rates because of your education or occupation? A recent article in the Times, As Data About Drivers Proliferates, Auto Insurers Look to Adjust Rates, reports on studies showing that such things affect rates. And some claim that insurers may be discriminating on forbidden bases. An excerpt:

Legally, insurance companies cannot consider income, race or religion in determining premiums, but the New York Public Interest Research Group contends that permissible questions about occupation and education level are being used “as surrogates for income,” said Andy Morrison, a consumer advocate at the organization.

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The research was simple: Mr. Morrison went to the websites of large auto insurers like Geico, Progressive and Liberty Mutual and typed in identical information for a single 30-year-old woman when seeking a rate quote. He changed only education level and occupation.

He found that a bank teller with a high school degree would pay on average 18 percent more than a bank executive with a college degree. A high school graduate who worked in retailing could pay 41 percent more annually than that bank executive