Consumer Watchdog Calls on Insurance Commissioner Lara to Reject Allstate’s Job-Based Insurance Rate Discrimination, Adopt Regulations to Stop the Practice Industrywide

Published on

Los Angeles, CA – Insurance Commissioner Ricardo Lara should reject Allstate’s proposed $165 million auto insurance rate hike and its two-tiered job- and education-based discriminatory rating system, wrote Consumer Watchdog in a letter sent to the Commissioner today. The group called on the Commissioner to adopt regulations to require all insurance companies industrywide to rate Californians fairly, regardless of their job or education levels, as he promised to do nearly three years ago. Additionally, the group urged the Commissioner to notice a public hearing to determine the additional amounts Allstate owes its customers for premium overcharges during the COVID-19 pandemic, when most Californians were driving less.

Overall, the rate hike will impact over 900,000 Allstate policyholders, who face an average $167 annual premium increase.

Under Allstate’s proposed job-based rating plan, low-income workers such as custodians, construction workers, and grocery clerks will pay higher premiums than drivers in the company’s preferred “professional” occupations, including engineers with a college degree, who get an arbitrary 4% rate reduction.

“Allstate’s two-tiered system is illegal under voter-approved Proposition 103, which prohibits the use of education and occupation as rating factors,” said Consumer Watchdog attorney Pamela Pressley. “Rather than continuing to approve individual companies’ discriminatory rating plans like Allstate’s, Commissioner Lara needs to follow through on his three-year-old promise to stop unfairly discriminatory rating practices based on occupation on an industry-wide basis.”

The Insurance Commissioner has failed to act on a regulation proposed three years ago to curb job- and education-based rate discrimination.

Consumer Watchdog and ten community and civil rights organizations challenged auto insurers’ illegal and discriminatory use of job and education in setting rates in February 2019, in a petition to the Commissioner to adopt regulations to end the practice industrywide. In September 2019, a Department of Insurance investigation confirmed that “wide socioeconomic disparities” are created by insurance companies surcharging California drivers based on nothing more than their occupation or educational status. Three years later, Commissioner Lara has yet to adopt a regulation to stop the practice, and the last workshop on a potential regulation held by the Department of Insurance was nearly a year and a half ago.

Consumer Watchdog also called on the Commissioner to notice a public hearing to determine the amount of additional premium overcharges that Allstate owes its California policyholders due to their reduced driving during the period the state’s COVID-19 stay-at-home orders were in effect from at least March 2020 to June 2021. According to Consumer Watchdog’s analysis, Allstate has so far only provided premium credits totaling less than half of the amount that the company overcharged customers during that time period, leaving hundreds of millions of dollars more owed. The Commissioner issued a letter to Allstate on October 5, 2021, confirming that “the PPA [private passenger auto] policyholders of Allstate Northbrook Indemnity Company should have received substantial additional PPA premium refunds or credits.” But to date, the Commissioner has taken no further action publicly to ensure that Allstate’s policyholders receive the refunds they deserve, according to Consumer Watchdog.
 
Read Consumer Watchdog’s Letter to the Commissioner
.
 
Over the last two months, Consumer Watchdog has filed challenges against proposed auto insurance rate hikes by another three of the largest auto insurers in the state—Mercury Insurance CompanyInterinsurance Exchange of the Automobile Club (“Auto Club”), and GEICO—that also utilize job- and education-based discriminatory rating systems and owe additional amounts for premium overcharges during the COVID-19 pandemic.
 
Read the community and civil rights groups’ 2019 petition.
 
Voter-approved Proposition 103 requires auto insurance premiums be based primarily on three mandatory factors—driving safety record, annual mileage, and years driving experience—and prohibits unfairly discriminatory rates. Occupation and education have never been approved by regulation as lawful rating factors under voter-enacted Proposition 103. Proposition 103 prohibits this kind of unfair rate discrimination, which can serve as a proxy for income or race.

– 30 –

Consumer Watchdog is a non-profit public interest organization. Visit us on the web at www.ConsumerWatchdog.org.

Pam Pressley
Pam Pressley
Consumer Watchdog's Senior Staff Attorney, Pamela Pressley has led Consumer Watchdog's efforts to enforce Proposition 103's mandates in court to protect California insurance policyholders against discriminatory practices and premium overcharges. Pam has authored appellate briefs and presented oral argument in cases successfully upholding the insurance initiative and other California consumer protection laws, resulting in numerous precedential published opinions, including The Foundation for Taxpayer and Consumer Rights v. Garamendi.
Latest Insurance Videos
Video thumbnail
KTVU-SF (FOX) - San Francisco, CA: Insurance Department Investigation
02:37
Video thumbnail
KCBS-LA (CBS) - Los Angeles, CA: Home Insurance Crisis
05:32
Video thumbnail
KCAL-LA - Los Angeles, CA: KCAL News Special: Home insurance Crisis
07:04
Video thumbnail
KCAL-LA - Los Angeles, CA: KCAL News Special: Home insurance Crisis
09:59
Video thumbnail
KGTV-SD (ABC) - San Diego, CA: Homeowners To Get Surcharge For LA Wildfires
02:48
Video thumbnail
My 58 - Sacramento, CA: State Farm Looking To Raise Rates
01:05
Video thumbnail
KGO-SF (ABC) - San Francisco, CA: State Farm Proposes More Insurance Rate Hikes
02:53
Video thumbnail
KOLO (ABC) - Reno, NV: Home Insurance Rate Hikes From State Farm
02:32
Video thumbnail
KMPH-FRES (FOX) - Fresno, CA: Looking At Process For Rate Approvals
07:48
Video thumbnail
KGTV-SD (ABC) - San Diego, CA: State Farm Approves For Insurance Rate Hike
02:06
Video thumbnail
KCBA (FOX) - Monterey, CA: Insurance Rate Hikes
02:17
Video thumbnail
KTVU-SF (FOX) - San Francisco, CA: State Farm Gets Okay To Raise Rates
05:17
Video thumbnail
KXTV-SAC (ABC) - Sacramento, CA: State Farm Rate hike Approved
04:05
Video thumbnail
KNTV-SF (NBC) - San Francisco, CA: Judge Backs State Farms 17% Rate Hike
00:57
Video thumbnail
KRON-SF (MyTV) - San Francisco, CA: State Farm Approved For Emergency Policy Rate Increase
02:19
Video thumbnail
KPIX-SF (CBS) - San Francisco, CA:State Farm Emergency Rate Hike Approved
00:49
Video thumbnail
Spectrum News 1-Los Angeles, CA: Insurance Agencies Want To Impose Surcharges on Homeowners
04:18
Video thumbnail
KGO-SF (ABC) - San Francisco, CA: Insurance Hotline Part 2
03:01
Video thumbnail
KGO-SF (ABC) - San Francisco, CA: Insurance Hotline Part 1
03:02
Video thumbnail
KTLA-LA (CW) - Los Angeles, CA: Eaton Fire Victims Call Out State Farm Insurance
03:35
Video thumbnail
KXTV-SAC (ABC) - Sacramento, CA: Insurance Surcharge Lawsuit
00:43
Video thumbnail
KCBA (FOX) - Monterey, CA: Group Sues To Block Insurance Surcharge For LA Wildfires
00:41
Video thumbnail
KABC-LA (ABC) - Los Angeles, CA: Consumer Group Sues To Block Insurance Surcharge
00:34
Video thumbnail
KGO-SF (ABC) - San Francisco, CA: Lawsuit Over Fair Plan Bailout
00:31
Video thumbnail
KOVR-SAC (CBS) - Sacramento, CA: Fiery Insurance Fight
02:05
Video thumbnail
KTVU-SF (FOX) - San Francisco, CA: State Farm Hike Decision Expected In Weeks
00:38
Video thumbnail
Spectrum News 1, CA: Consumer Watchdog Sues To Block Insurers From Adding Surcharge After Wildfires
00:23
Video thumbnail
CW Litigation Director, Will Pletcher's Closing Argument At CDI State Farm Hearing
17:28
Video thumbnail
WDAM (NBC) - Hattiesburg, MS: State Farm Questioned Over Rate Hike Proposal
02:37
Video thumbnail
KBVU (FOX) - Eureka, CA: State Farm Rate Hike Hearing Day 2
03:00
Video thumbnail
KNTV-SF (NBC) - San Francisco, CA: State Farm Proposed Interim Rate Hike
02:49
Video thumbnail
KCAL-LA - Los Angeles, CA: State Farm Rate Hike Hearing
00:54
Video thumbnail
KTTV-LA (FOX) - Los Angeles, CA: State Farm Requests Emergency Rate Increases
02:14
Video thumbnail
KXTV-SAC (ABC) - Sacramento, CA: State Farm Rate Hike Hearing
03:29
Video thumbnail
KCRA-SAC (NBC) - Sacramento, CA: State Farm Rate Hike Request
01:09
Video thumbnail
KPIX-SF (CBS) - San Francisco, CA: State Farm Argues For Rate Increase
05:02
Video thumbnail
KFMB-SD (CBS) - San Diego, CA: State Farm Promises Refund If Rate Too High
02:45
Video thumbnail
KRCR-CR (ABC) - Chico/Redding, CA: State Farm Rate Hike Hearing
03:02
Video thumbnail
KNSD-SD (NBC) - San Diego, CA: Hearing Over State Farm Request For 22% Rate Hike
01:10
Video thumbnail
KTTV-LA (FOX) - Los Angeles, CA: State Farm Requests Emergency Rate Increases
02:26
Latest Privacy Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.