Group Urges N.Y. to Review Auto Insurance Rate Factors

A consumer advocacy group is urging New York regulators and legislators to undertake a thorough review of rate-making practices by auto insurers in New York.

The New York Public Interest Research Group (NYPIRG) said that according to its analysis, some of the largest auto insurers in the state consider motorists’ education and occupation when setting premiums, a practice that NYPIRG called unfair for consumers. NYPIRG published its analysis on April 3. “It’s a widespread practice for sure,” said Andy Morrison, consumer advocate at NYPIRG.

“That’s why we are calling on regulators in New York State to take a look at this issue, and we are hoping that they will share our view that insurance rates should be based on how you drive, not who you are.” Morrison added, “If the regulators don’t share our view, then we will turn our attention to the legislature.”

Already, one New York legislator has expressed his support for banning the use of education and occupation in setting auto insurance rates. New York state Sen. Timothy Kennedy, D-Buffalo, told The Associated Press following the publication of NYPIRG’s analysis that he may seek legislation to prohibit the practice. “Your car insurance should be based on one thing: your driving record,” Sen. Kennedy was quoted as saying in an AP report.

In response, the New York Insurance Association (NYIA), an industry association, defended the insurers’ rate-setting practices. NYIA said these factors are correlated with risk, which is why regulators have allowed the use of education and occupation in determining how much a consumer pays for insurance.

“Companies are only allowed to use factors that are predictive of loss. Never once does NYPIRG concede that there is not an association with risk,” said NYIA’s President Ellen Melchionni.

Melchionni said New York’s insurance market is vibrant and delivers a great deal of choice to consumers. “New York’s residents benefit from choice — there are a range of prices and options,” she added. “Companies use a variety of underwriting factors to determine the price of a policy, all of which have been approved for use by regulators.”