Consumer Watchdog Raises Concerns About Occupation-Based Auto Insurance Discounts

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Consumer Watchdog is urging the California Department of Insurance to deny auto insurance rate proposals from insurers Geico and Progressive that the consumer group says will dole out unfair discounts based on occupation.

The organization says discounts given to so-called affinity groups give preference to drivers who are part of “elite professions,” such as attorneys and engineers, and discriminate against drivers in less-skilled occupations.

“Progressive and Geico want to attract customers who they deem desirable by adding a person’s occupation into the equation, giving breaks to the wealthy while squeezing out those less economically advantaged by charging them more,” Consumer Watchdog staff attorney Jonathan Phenix said in a statement.

Under Proposition 103, which passed in 1988, insurers must submit a rate filing application to the state insurance department whenever they want to increase or decrease rates. 

The law allows for three rating factors that can be considered when setting auto insurance rates — driving record, annual mileage and a driver’s years of experience.

Insurers sometimes ask whether drivers are part of certain business or professional groups, such as bar associations, to see if they could be considered for a discount, supposedly based on a lower loss history for that group.

On Geico’s website, for example, the insurer lists a number of organizations that could qualify for a discount, including business and alumni groups.

But to get approval from the state for such a discount, an insurer needs to provide several years’ worth of loss history to demonstrate that the group has a lower loss rate, and the rate cannot be considered discriminatory.

Nancy Kincaid, spokeswoman for the California Department of Insurance, said Geico’s and Progressive’s rate filings are currently under review by the department’s rate regulation branch, and that all information given by both insurers and intervenors like Consumer Watchdog are considered.

“A decision will come only after the independent actuaries and analysts complete their work on the filings,” she wrote in an email.

Geico and Progressive did not immediately respond to requests for comment.

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