Insurance Commissioner Jones Lets An Insurance Company Base Auto Insurance Premiums on Income and Education Levels, In Violation of Proposition 103

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Santa Monica, CA — California Insurance Commissioner Dave Jones has approved a decision by an administrative law judge permitting Allstate Insurance Company to grant special premium benefits to motorists who attended prestigious colleges or have high income jobs like lawyers and doctors.

The agency staff has previously allowed other insurance companies to offer similar programs, known as “affinity groups,” but this is the first instance in which any insurance commissioner has approved the marketing practice after a hearing was noticed on the insurer’s rate application including the proposed rating plan.

Insurance reform Proposition 103 bars insurance companies from using factors like educational level and employment status without proof that they are “substantially related to the risk of loss” and without a full public hearing – neither of which occurred here. Consumer Watchdog objected to the administrative law judge’s ruling and will ask the Commissioner to reconsider his decision.

“This is a deeply disappointing decision that, if it stands, will allow Allstate to penalize motorists just because they don’t have high-income jobs or advanced degrees,” said Harvey Rosenfield, the author of Proposition 103. “Commissioner Jones should reconsider his decision or address the problem industry-wide, or in retrospect this ruling will go down in history as a Christmas gift to the auto insurance industry.”

Pam Pressley, Consumer Watchdog’s Litigation Director said: “Consumer Watchdog will formally request that the Commissioner reconsider his decision, and is prepared to take further action if he does not.”

Read a factsheet on the affinity group issue:

Read a recent commentary on the issue:

Read Consumer Watchdog’s brief urging the Administrative Law Judge to reject Allstate’s request to utilize the illegal rating factors:

Read the judge’s decision and the Insurance Commissioner’s order approving it:

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Harvey Rosenfield
Harvey Rosenfield
As Consumer Watchdog's founder, Harvey Rosenfield is one of the nation's foremost consumer advocates. Trained as a public interest lawyer, Rosenfield authored Proposition 103 and organized the campaign that led to its passage by California voters in 1988 despite over $80 million spent in opposition (still a record).

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