Asbury Park Press

WATCHDOGS: Better-educated Drivers Get Lower Rates

GEICO accused of bias against poor

Asbury Park Press — Thursday, March 1, 2007

BY TOM BALDWIN
GANNETT STATE BUREAU

TRENTON — Drivers without college degrees or in low-paying jobs pay more for car insurance from GEICO, according to a study released by an advocacy group Wednesday in advance of debate on a bill that might ban such an actuarial application.

"They use education and income, occupation, as a proxy for race," said state Sen. Nia Gill, D-Essex, sponsor of the bill that would ban the use of schooling and workplace status in the string of factors insurers use to set rates.

"It's not just a poor person's issue here," said Gill, whose bill is scheduled to receive committee attention Monday. "It goes directly to the middle class." She said 73 percent of New Jerseyans lack a college degree.

Gill said her bill would eliminate using education levels or job status, items she said did not figure in actuarial decisions by some other insurers. "You don't need it to be competitive," she said. "You need it to be exploitive."

GEICO, now underwriting the state's third-largest number of policies, is one of many auto insurers that has returned to New Jersey after overregulation drove away many companies – GEICO left in 1976. Changes went into effect after 2003 that free up companies to make profits here.

Asked if the issue at Wednesday's news conference were one of the green lights given by the state to lure back the companies, Gill and others said not directly. But they noted the state Department of Banking and Insurance does not see what data insurers use to set rates.

Gill said she sought the data, but, "We have been denied."

Dick Barber, treasurer of the New Jersey NAACP, said, "I find it anti-poor. I find it anti-urban, anti-rural and anti-immigrant." Barber called the GEICO mascot, a gecko, "that silly-looking, trash-talking lizard."

The advocacy group New Jersey Citizen Action said it had gone to the Web site for GEICO and sought rates for 449 phantom drivers where the lone differences were educations and jobs.

The group said quotes differed by 9 percent to 61 percent.

The group said a 51-year-old professional woman from Camden driving a U.S.-built sedan paid $1,063 if she possessed a doctoral degree, but $1,712 if she had nothing beyond a high-school degree.

GEICO spokeswoman Rynthia Rost stood outside the Statehouse conference room where Citizen Action unveiled the study and answered reporters' questions.

"We don't use race and income to set our rates," Rost said, acknowledging the company does use education and jobs because she said they, among other factors, matter in predicting the odds of an accident or other insurance loss.

She said the company has some 616,000 New Jersey customers, adding, "What we use is a multitude of data. . . . We use gender."

Asked whether GEICO would leave New Jersey if the Gill bill to become law, Rost did not answer directly, but asked, "Do you want to go back to the day when there was no competition?"

Of the Citizen Action report, she said, "It is not sound."

Assemblyman Neil Cohen, D-Union, who has sponsored a tandem bill in the Assembly, called the GEICO practice "discriminatory and unconstitutional."

"The Civil Rights Act of 1964 prohibits using race as a factor in providing insurance," Cohen said.

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