What's happening
This bill prohibits motor vehicle insurers in New York from using socioeconomic factors like age, education, or income in setting rates or coverage.
Why it matters
Aims to make auto insurance pricing fairer. by banning the use of factors like age, education, occupation, income, and credit score, which often disproportionately affect lower-income individuals, young drivers, and people from marginalized backgrounds.
Targets both explicit and subtle forms of discrimination. by also prohibiting the use of characteristics that indirectly signal socioeconomic status, such as property ownership or a consumer’s price sensitivity, attempting to close loopholes insurers might use to continue discriminatory practices.
Limits insurers' ability to use personal data in rate calculations. by barring these factors in both the construction of actuarial models and in any adjustments to premiums, terms of coverage, or the decision to issue or renew policies, potentially leading to more transparent and accountable pricing practices.
Could impact overall insurance market dynamics. by shifting how risk is assessed and distributed, possibly resulting in broader access to coverage for groups historically penalized by traditional rating factors, while also raising questions about how insurers will evaluate risk in the absence of these criteria.
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Who cares
Headline styles
Ban Socioeconomic Bias in Insurance
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to insurance
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Ban Insurance Rate Discrimination
In Assembly Committee · Insurance · Sponsor Crystal Peoples-Stokes
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2854
2017-2018 Regular Sessions
IN SENATE
January 17, 2017
Introduced by Sens. PARKER, PERKINS -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to prohibiting motor vehicle insurers from discriminating based on socioeconomic factors
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The insurance law is amended by adding a new section 2616 to read as follows:
§ 2616. Rating factors prohibited. (a) Any insurer or insurance company group doing business in the state as a motor vehicle insurer may not use classification plans, rules or rates, rating plans or modifications of any of the foregoing, based in whole or in part on the factors specified in this section. Any classification plans, rules or rates, rating plans or modifications issued by said insurer or insurance company group using the following factors in whole or in part shall be deemed to violate public policy and are subject to disapproval by the superintendent:
(1) age;
(2) marital status;
(3) sex;
(4) sexual orientation;
(5) educational background or education level attained;
(6) employment status or occupation;
(7) income level;
(8) consumer credit information or score;
(9) ownership or interest in real property;
(10) any indication of a consumer's price elasticity of demand; and
(11) any other characteristic indicating or tending to indicate the socioeconomic status of an individual.
(b) It shall further be unlawful to consider the factors specified in subdivision (a) of this section to:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05531-01-7
S. 2854 2
(1) adjust any algorithm or equation used to construct actuarial tables or otherwise determine the cost of coverage;
(2) make any distinction or discrimination between persons as to the premiums or rates charged for motor vehicle insurance policies or the terms of coverage or in any other manner whatsoever;
(3) demand or require a greater premium from any person than such insurer requires at that time from other individuals or entities in similar cases; or
(4) refuse to issue, renew, or sell a policy after appropriate application therefor.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
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
2016: S.7904 - Referred to Insurance
Fiscal implications
None
Effective date
Immediately
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.