Fla. Questioning Use of Education, Job Criteria in Rating Auto Policies

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In Florida, it literally pays to have a high school diploma and a post secondary education – to the disapproval of Insurance Commissioner Kevin McCarty.

The use of occupation and education as underwriting factors by insurance companies concerns McCarty. He said the use of such information, primarily by automobile insurance companies, discriminates against minority policyholders who end up paying higher premiums regardless of their driving records.

McCarty said the Office of Insurance Regulation looked at one example of how these rating practices can have a significant impact on rates paid by Floridians.

According to their findings, a single, 23 year old male, insuring a 2000 model Chevy Malibu would pay different rates depending on his occupation and education. In Hialeah, Fla., for example, if the policyholder had no high school diploma and was a mechanic he would pay $4,225.36 for coverage; however, if he was an engineer with a Ph.D. he would pay only $1,403.59.

This difference in premium exists despite the policyholders having identical driving records, identical uses of vehicle and the exact same coverages and deductibles.

Florida officials are concerned that statistically significant correlations between education, occupation and race could make such underwriting practices discriminatory and may need to be examined by lawmakers.

Representatives of insurance industry trade groups and companies are scheduled to testify before McCarty and a panel today (Feb. 9) in Tallahassee.

In a letter to the president of the National Association of Insurance Commissioners last March, the Consumer Federation of America outlined concerns surrounding the use of occupational and educational data in 44 of 50 states by a major national automobile insurer.

To view the CFA letter go to http://www.floir.com/pdf/geicoautoinsletter031406.pdf.

Source: www.floir.com


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