By Bob Egelko, SAN FRANCISCO CHRONICLE
January 6, 2019
Thirty years after California voters told auto insurers to focus on a driver’s safety record in setting rates, the state’s outgoing insurance commissioner has banned the apparently widespread practice of charging different rates for male and female drivers, regardless of their records.
New regulations by Commissioner Dave Jones eliminate gender from the factors an auto insurance company can consider in setting rates. The rules took effect Jan. 1, but they allow companies until July 1 to submit gender-neutral rate plans, which would be implemented by the end of the year.
The rules will change practices that vary widely among insurers and among regions in California, according to the Department of Insurance. It said some companies have found women to be a higher risk and thus charge them higher rates, while others find similarly situated men to pose higher risks.
Nationally, a 2017 survey by the Consumer Federation of America in 10 cities, including Los Angeles, found that women ages 40 or 60 with perfect driving records were often charged more than men of similar ages, while 20-year-old women were often charged less than men of the same age with similar driving records.
“These regulations ensure that auto insurance rates are based on factors within a driver’s control, rather than personal characteristics,” Jones said in a statement. The termed-out commissioner leaves office this week and will be succeeded by fellow Democrat Ricardo Lara.
The state gained control over auto and homeowners’ insurance rates in November 1988 when voters narrowly approved Proposition 103. The initiative required auto insurers to reduce their rates by 20 percent and submit future increases to the newly established insurance commissioner, who under court rulings was required to allow companies a “fair rate of return” on their investment.
Prop. 103 also required insurers to base their rates on a driver’s safety record, miles driven and years of driving experience. But it allowed the commissioner to adopt regulations letting insurers include other factors in deciding what risks a driver posed.
Until now, those regulations have let the companies consider a driver’s gender. Jones’ regulation deletes gender while leaving other optional factors in place, including marital status.
Some groups of insurers opposed the change and argued that California should instead expand considerations of gender in rate-setting to include drivers who do not specify their gender, a category authorized on driver’s licenses under a new state law. Oregon took that step in April, allowing insurers to charge different rates for three gender categories.
“Given the reasonable path Oregon has forged on this issue, we were surprised by California’s decision to ban a legitimate rating factor,” the driver’s gender, said Katie Pettibone, Western regional vice president of the American Property Casualty Insurance Association. “There may be an impact felt by consumers in the state.”
Advocacy group Consumer Watchdog praised the new regulations and said Prop. 103 was always intended to eliminate discrimination in auto rates.
“Gender and sex have no more place in what we pay for auto insurance than race or ethnicity do,” said the group’s executive director, Carmen Balber. Racial and ethnic discrimination in insurance rates has long been forbidden by state law.