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CR urges California to finalize regulation making auto insurance discount programs fair and equitable

Current discount programs unfairly discriminate against California drivers with less education and lower paying jobs

SACRAMENTO, CA – Consumer Reports called on California Insurance Commissioner Ricardo Lara in a letter today to enact new rules that would help prevent auto insurers from charging higher rates to Californians with lower income jobs and less education. Commissioner Lara is considering a proposed regulation that would require insurers to make group discount programs more fair and equitable so that all Californians could benefit.

A December 2019 California Department of Insurance investigation found that current auto insurance discount programs provide some consumers in higher income occupations with lower rates, while people of color and lower income drivers pay significantly more. This situation violates the letter and spirit of Proposition 103, passed by Californians to eliminate discriminatory practices in the pricing and availability of insurance.

“It’s clear that Californians with less education and lower income jobs don’t have the same access to discount programs and can end up paying more for coverage compared to others with the same driving record,” said Chuck Bell, advocacy programs director for Consumer Reports.  “That’s simply unfair and drives up the cost of essential auto insurance for those who are least able to afford it.  All Californians should have access to insurance group discounts in a fair, equitable, and nondiscriminatory manner as originally intended by Proposition 103.”

Earlier this year, Consumer Reports released a new investigation finding that some insurers quoted higher premiums, on average, to drivers in other states who had completed less education and lower paying jobs. While Proposition 103 has helped California ensure that auto premiums are based primarily on driving records, the group discount programs have allowed unfair pricing based on education and occupation to creep back in for drivers in the state.

For a more detailed analysis, see Consumer Reports’ letter to California Insurance Commissioner Ricardo Lara urging him to finalize a proposed regulation that would address this issue.

Michael McCauley, michael.mccauley@consumer.org, 415-902-9537