Prohibits motor vehicle insurers from discrimination on the basis of socioeconomic factors in determining algorithms used to construct actuarial tables, coverage terms, premiums and/or rates

1 Co-sponsor

• Bill Perkins

Title of bill

An act to amend the insurance law, in relation to prohibiting motor vehicle insurers from discriminating based on socioeconomic factors

Purpose or general idea of bill

Prohibits motor vehicle insurers from discrimination on the basis of socioeconomic factors in determining algorithms used to construct actuarial tables, coverage terms, premiums and or rates.

Summary of specific provisions

This bill will amend Insurance Law, adding a new § 2616, to prohibit the use of: (a) sex; (b) marital status; (c) sexual orientation; (d) age; (e) consumer credit information or credit score; (f) any measure of a consumer's price elasticity of demand; (g) employment status or occupation; (h) income level; (i) educational background or education level attained; (j) ownership or interest in real property; (k) any other characteristic indicating or tending to indicate the socioeconomic status of an individual in any classification plans, rules or rates, rating plans, or modifications issued by any insurer or insurance company group.

Justification

In order to comply with New York State law a person operating a car must have limited liability auto insurance. Currently, auto insurers doing business may use any range of factors to determine premiums which leads to adverse treatment of low-to moderate-income drivers. In the State of New York, insurance companies are using factors other than a driver's experience and driving record to calculate a drivers' premium. Insurers use a wide range of socioeconomic and non-driving factors to determine a driver's premium. Insurers use credit scores, occupation, level of educational attainment, marital status, and homeownership in addition to already prohibited factors such as age and sex. Some insurance companies even use consumer data to determine whether a customer is likely to shop around, and then sets prices for its policies accordingly. Using socioeconomic and non-driving factors that are not inherently related to a person's ability to operate a car, safely, forces good drivers who are of lower socioeconomic status to pay more for our State's obligatory auto insurance.

By using rating factors such as these, good drivers of lower socioeconomic status are not treated equally in the auto insurance market place. The Western New York Law Center, among other state and national organizations, has conducted research looking into the impact of socioeconomic factors on auto insurance premiums for New York Drivers. The Western New York Law Center recently did a study that examined over 5,000 rate quotes for drivers in Western New York. They found that a woman with a lower socioeconomic status pays as much as 227.11% more for limited liability auto insurance than a driver with the same driving record and a high socioeconomic status. A man with a lower socioeconomic status is charged 174.26% more for limited liability auto insurance than a driver with the same driving record and a high socioeconomic status. Simply put, when all driving related factors are held constant, drivers with lower levels of education, occupational status, marital status, and renters all pay between 1.74 to 2.27 times as much for auto insurance as their higher status peers.

It is time to stop allowing these rating practices which aid in perpetuating the cycle of poverty.

Prior legislative history

New Bill.

Fiscal implications

None

Effective date

Immediately