Low-Level Jobs, Less School Could Mean Costly Auto Policies

Drivers with less education and lower-ranking jobs could wind up paying more for auto insurance, magnifying the impact of systemic racism, according to a Consumer Reports analysis.

Source: Bloomberg | Published on January 28, 2021

driver data sharing

The consumer-advocacy group sought price quotes from several insurance companies for a hypothetical person, varying only the individual’s education or occupation. The analysis, released Thursday, found that Progressive Corp. and Berkshire Hathaway Inc.’s Geico quoted higher premiums for customers with lower-ranking jobs, while those companies as well as Liberty Mutual gave higher quotes for customers with less education.

Some insurers, including Allstate Corp. and Travelers Cos., didn’t ask for occupation or education level.

The auto-insurance industry has traditionally relied on many factors to determine who are the safest risks, but the use of education and job status has come under scrutiny in recent years. Some states, including New York, have instituted new regulations around the practice. California prohibited the use of gender in auto ratings.

Consumer Reports said state regulators should ban the use of all non-driving factors in setting premiums.

“They stack up and then, obviously, what ends up happening is that altogether wealthier drivers are likely to have access to auto insurance at better rates than low-income drivers,” Kaveh Waddell, deputy editor for Consumer Reports’ digital lab, said in a phone interview.

Many Factors

Liberty Mutual looks at “dozens of factors” that are allowed by state regulators when determining a customer’s risk, the company said in an emailed statement, adding that it’s committed to offering fair and competitively priced car insurance.

A Progressive spokesperson declined to immediately comment while a representative for Geico didn’t immediately respond to a message seeking comment.

“Occupation and education are just two of many non-driving variables that have been proven to improve the accuracy of pricing for several carriers, which leads to more affordable prices and greater availability in the broader insurance market,” the American Property Casualty Insurance Association said in an emailed statement.

Consumer Reports analyzed more than 800 policy price quotes from nine insurers, using 21 zip codes in six different states and Washington D.C. The investigation didn’t involve the entire application process, meaning Consumer Reports received initial quotes but wasn’t able to see how those factors affected the final price.