By Duffie Osental, INSURANCE BUSINESS AMERICA
January 28, 2020
Advocacy group Consumer Watchdog has urged California Insurance Commissioner Ricardo Lara to reject a proposed 5% auto insurance rate increase by Mercury Insurance Company that “discriminates against lower income, less-educated drivers.”
In a statement, Consumer Watchdog called on Lara to “stop approving rate increases with job and education-based premium surcharges” after a Department of Insurance investigation revealed that such surcharges created “wide socioeconomic disparities.”
“Commissioner Lara should stop approving rate increases that he has acknowledged are discriminatory and issue rules to ensure that lower income communities of color no longer pay more to subsidize the rich,” said Carmen Balber, executive director of Consumer Watchdog. “California law prohibits drivers from paying more based on how much they earn and where they went to school, instead of how well they drive.”
According to the advocacy group, a September 2019 Department of Insurance analysis of industry data “confirmed that insurance companies are charging higher premiums to drivers who reside in postal codes with lower per capita incomes, reflecting job status; have lower levels of educational attainment – and in which communities of color predominate.”
“Despite assurances the Department would address these unjustified and unlawful surcharges, the harm to communities of color and blue-collar California drivers is growing, forcing people who do not qualify for special treatment to subsidize the premiums of those in elite professions like doctors, engineers, and CPAs,” said Harvey Rosenfield, founder of Consumer Watchdog. “New rules must end these surcharges on lower-income and less-educated drivers that drive up the cost of insurance for people who can least afford it.”
