New Jersey State Assemblyman Neil Cohen has introduced a bill that would prohibit car insurers from using a customer's education and income to set premiums. The action comes after it was revealed in newspaper reports that GEICO charged blue-collar workers with less formal education more for the same coverage than it charged more affluent people with more formal education.

Such a law would make New Jersey the first state to prevent insurers from using education to determine auto insurance rates, according to the National Conference of State Legislatures (NCSL), which searched a database of statutes. Ten states prohibit the use of driver income, said Miun Gleeson, spokeswoman for the National Association of Insurance Commissioners (NAIC) in Kansas City.

“It’s not fair,” said Cohen. “I don't think it’s criteria that’s objective.” State Sen. Nia Gill has introduced a bill similar to Cohen’s in the state Senate.

Geico’s use of income and education was approved by the New Jersey Department of Banking and Insurance. GEICO refused to comment beyond a written statement issued two weeks ago. Geico “evaluates more than two dozen potential risk factors” in its applicants and “has successfully used these underwriting factors across the country,” according to the statement.

Bloomberg News Service reports that State Farm Mutual Automobile Insurance Co., the largest car insurer in the country, doesn’t use education or occupation to set rates, according to Dick Luedke, a spokesman for the Bloomington, Ill.-based company. New Jersey’s No. 3 insurer, Progressive Corp. of Mayfield Village, Ohio, also refrains, said spokesman William Perry. Allstate, No. 2 in the state, is testing uses in South Carolina and Alabama, spokesman Mike Siemienas said.

Assemblyman Targets Criteria GEICO Uses to Set Rates (Asbury Park NJ Press 3/9/06)

March 21, 2006