Car insurance bills might be changing in the coming weeks.
A new state regulation, aimed at eliminating what Gov. Andrew Cuomo calls a ‘discriminatory’ practice would ban car insurance companies from using education history and job status as factors while setting rates.
According to Maria Vullo, superintendent of New York State’s Department of Financial Services said, “Under this proposed regulation, auto insurers cannot use educational and occupational status in their insurance underwriting, unless they can clearly demonstrate a plausible relationship to the risk of loss.”
In November, the Wall Street Journal reported that the state reached out to Allstate, Geico, Liberty Mutual, and Progressive to ask why this practice shouldn’t be banned. The report pointed out that in some cases unskilled workers pay more than those who are more highly-educated.
The regulation is going through a 45-day comment period, which would be followed by execution of it.
“Insurers use factors such as education and occupation because they are helpful in predicting the likelihood of an insurance loss, and allow for more accurate underwriting and pricing,” said Kristina Baldwin, the Vice President for State Government Relations for the Property Casualty Insurers Association of America. The group represents insurers in New York, and across the country.
“More accurate underwriting and pricing means that policyholders pay based on the level of risk that they represent,” she added. “Those who represent a lesser risk pay less; those that represent a greater risk pay more.”
It’s not entirely clear how every insured driver will be impacted. Whether there is an increase in rates, or decrease, the likely debate over the execution of this regulation will continue for several months.