Lawmakers in New York Question Auto Insurance Rate Factors

Auto insurers use many factors, including a motorist’s education and occupation, to accurately gauge their risk, industry representatives told state lawmakers Thursday, a week after a consumer advocacy group called the practice unfair.

“The more accurate we can make our premiums the more savings we can provide,” said Kristina Baldwin, an assistant vice president at the Property Casualty Insurers Association of America, a trade group. Otherwise, “lower risk individuals are going to have to subsidize the premiums of higher risk individuals.”

The lawmakers are reviewing the state’s high insurance costs. Assemblyman Kevin Cahill, D-Kingston and the chair of the committee holding Thursday’s hearing, said he’d like to see insurers acknowledge publicly what factors they use in setting rates.

“It’s important for the public to know what is being considered,” he said. “If they have data that proves that a person with a particular vocational background has a better or worse driving record, then let’s see it.”

Sen. Timothy Kennedy, D-Buffalo, told The Associated Press that he may seek legislation to prohibit the practice.

“Constituents are always complaining, and rightfully so, about the sky-high cost of car insurance,” Kennedy said. “There should be equality across the board. Your car insurance should be based on one thing: your driving record.”

The state’s Department of Financial Services is now reviewing last week’s report from the New York Public Interest Research Group, which found that three of the state’s largest auto insurers charge blue-collar workers significantly more than college-educated professionals with the same driving record.

“There’s nothing in the law that currently prohibits it,” said Robert Easton, executive deputy superintendent at the department.

NYPIRG analyzed online insurance quotes from GEICO, Progressive and Liberty Mutual and found that prices ranged by hundreds of dollars depending on the education and occupation of the potential policyholder.

New York has the fourth highest average auto insurance costs in the nation, following New Jersey, Washington, D.C., and Louisiana. Baldwin and representatives from other insurance trade groups said medical costs, state insurance mandates, population density and fraud all play a role in setting rates.