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GEICO Agrees to Stop Using Job Status, Education as Criteria for Auto Insurance Rates in New York

The New York State Department of Financial Services announced that GEICO has agreed to comply with the agency’s new regulation that prohibits insurers from using an individual’s occupational status and/or education level as criteria for setting auto insurance rates.

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The New York State Department of Financial Services announced that GEICO has agreed to comply with the agency’s new regulation that prohibits insurers from using an individual’s occupational status and/or education level as criteria for setting auto insurance rates.

In December, the agency announced that it reached similar agreements with Liberty Mutual and Allstate. The three companies provide coverage to nearly half of the private-passenger auto insurance market in the state, according to the Department of Financial Services.

Under the new regulation, which the agency finalized in December, using an individual’s occupational status and/or education level to determine auto insurance rates is considered an unfair practice.

“The use of education and occupation in determining insurance rates unfairly penalizes drivers without college degrees or who work in low-wage jobs or industries without having a rational relationship to driving,” Financial Services Superintendent Maria Vullo said. “The result is that drivers with higher education and income pay less for auto insurance with no rationale evidence that they are better drivers.  We are pleased that GEICO has recognized its responsibilities to immediately comply with this regulation and we expect any other company that may be utilizing education and occupation in their underwriting to immediately agree to comply before the effective date of the regulation.”

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The New York State Department of Financial Services conducted a multi-year investigation revealing that some insurers in New York have used an individual’s education level and/or occupational status in establishing initial tier placement without a clear demonstration of the required relationship between these factors and driving ability, according to the agency. “As a result, classes of insureds were impacted unfairly because their rates were being skewed from a policy’s inception, regardless of whether the insurer could rationally predict a different risk of loss for that insured,” the agency said.

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