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CR investigates how auto insurers are using drivers’ education and occupation to set premiums

Consumer Reports set out to understand how a driver’s education and occupation could impact how much they pay for auto insurance. Insurance companies routinely consider driving-related and non-driving-related factors when pricing automobile insurance policies.  Driving-related factors include driving record (including history of traffic violations), number of miles driven per year, and years of driving experience. Non-driving-related factors include credit data, education level, job level, homeownership status, and marital status.

CR collected 869 online policy price quotes for a hypothetical driver from nine auto insurers, using 21 ZIP codes in six states and Washington, D.C. Consumer Reports sought quotes for a hypothetical 30-year-old woman who owns her 2016 Toyota Camry LE and has a clean driving record, shopping for her states’ minimum required coverage. The only details that CR varied between requests were her education and occupation.

Three companies (Liberty Mutual, Geico, and Progressive) provided preliminary quotes that were more expensive for consumers with lower education attainment.  Two companies (Geico and Progressive) quoted higher prices to consumers with lower-paying jobs than to those with higher-paying jobs.  Five of the companies studied (Allstate, NJM Insurance, Plymouth Rock, State Farm, and Travelers) do not ask prospective customers about job or education levels.

In conjunction with it’s investigation, Consumer Reports sent letters to insurance commissioners in 46 states and the District of Columbia urging them to ban the use of education and occupation for setting auto insurance premiums.  California, Massachusetts, New York, and Michigan currently prohibit insurers from using these two rating factors.

CR also sent letters to Geico and Progressive calling on them to stop using education and occupation as rating factors, and to Liberty Mutual to discontinue the use of education as a rating factor.

Copies of CR’s white paper on its investigation and its letters to the state insurance commissioners and the three insurance companies can be downloaded using the links above.

 

 

 

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