LOS ANGELES, September 22, 2022 /PRNewswire/ — Insurance Commissioner Richard Lara should reject Allstate’s proposal $165 million car insurance rate hike and its two-tier discriminatory rating system based on job and education, Consumer Watchdog wrote in a letter to the commissioner today. The group called on the commissioner to enact regulations requiring all insurance companies across the industry to fairly rate Californians regardless of their job or educational level, as he promised nearly three years ago. In addition, the group called on the commissioner to schedule a public hearing to determine the additional amounts Allstate owes its customers for excessive charges during the COVID-19 pandemic, when most Californians were driving less.
Collectively, the rate hike affects over 900,000 Allstate policyholders, who face an average $167 annual premium increase.
Under Allstate’s proposed job-based evaluation plan, low-income workers such as janitors, construction workers and grocers pay higher premiums than drivers in the company’s preferred “professional” jobs, including engineers with college degrees, who receive an arbitrary 4% rate cut.
“Allstate’s two-tier system is illegal under voter-approved Proposition 103, which prohibits the use of education and occupation as rating factors,” Consumer Watchdog’s attorney said Pamela Pressley. “Instead of continuing to approve discriminatory individual company evaluation plans like Allstate’s, Commissioner Lara must honor his three-year-old promise to end unfairly discriminatory evaluation practices based on occupation across the industry.”
The Insurance Commissioner has failed to respond to a regulation proposed three years ago to curb job and educational tariff discrimination.
Consumer Watchdog and ten community and civil rights organizations challenged auto insurers’ illegal and discriminatory use of employment and education in setting rates February 2019, in a petition to the commissioner to enact regulations to end the practice across the industry. in the Sept 2019A study by the Ministry of Insurance confirmed that “broad socioeconomic disparities” arise from the surcharge imposed by insurance companies California Drivers only because of their profession or level of education. Three years later, Commissioner Lara has yet to issue a regulation to stop this practice and it has been almost a year and a half since the last workshop on a possible regulation held by the Ministry of Insurance.
Consumer Watchdog also asked the commissioner to announce a public hearing to determine the amount of additional markups Allstate owes him California Policyholders due to their reduced driving during the minimum period that the state’s COVID-19 stay-at-home orders were in effect March 2020 to June 2021. According to Consumer Watchdog’s analysis, Allstate has only provided premium credit for less than half the amount the company overcharged its customers during that period, owing hundreds of millions more dollars. The commissioner forwarded a letter to Allstate October 5, 2021which confirms that “the PPA [private passenger auto] Allstate Northbrook Indemnity Company policyholders should have received significant additional PPA premium refunds or credits.” However, to date, the Commissioner has not publicly taken further action to ensure Allstate policyholders receive the reimbursements they deserve, according to Consumer Watchdog.
Read Consumer Watchdog’s letter to the Commissioner.
Over the past two months, Consumer Watchdog has filed challenges to proposed auto insurance rate increases by three other of the state’s largest auto insurers — Mercury Insurance Company, Interinsurance Exchange of the Automobile Club (“Auto Club”) and GEICO — also employing job- and education-based discriminatory rating systems and owe additional amounts for inflated premiums during the COVID-19 pandemic.
Read the 2019 petition from the community and civil rights groups.
Voter-approved Proposition 103 requires auto insurance premiums to be based primarily on three mandatory factors – driver safety record, annual mileage and years of driving experience – and prohibits unfairly discriminatory rates. Career and education were never approved as legitimate evaluative factors under voter-enacted Proposition 103. Proposition 103 prohibits this type of unfair tariff discrimination, which can be used as an indicator of income or race.
Consumer Watchdog is a non-profit public interest organization. Visit us on the web at www.ConsumerWatchdog.org.
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SOURCE Consumer watchdog