Financial regulators in New York have banned the use of a consumer’s educational background and occupation as factors in pricing auto insurance premiums.
People familiar with the matter told
Dow Jones Newswires that New York Financial Services Superintendent Maria T. Vullo is expected to disclose soon that her department has made the decision following an extensive investigation of the controversial insurance practice.
The sources also said that the state will disclose that
Allstate and
Liberty Mutual Insurance have agreed to eliminate the use of such factors when determining rates for New Yorkers.
Vullo is of the belief that insurers’ use of education and occupation penalizes motorists without college degrees, as well as those who work in low-wage jobs or industries. The Financial Services department has been investigating the matter for several years.
Some insurers maintain that the factors are actuarially justified in that they can help predict the probability of an insurance loss and allow for more precise underwriting and pricing.
The superintendent has also challenged the use of credit histories in determining insurance rates. However, credit histories have been permissible by New York statute since 2004, sources explained. Thus, Vullo is unable to use her authority to rescind their use in pricing.
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