Consumer Watchdog urges Insurance Commissioner Lara to end Allstate’s insurance rate discrimination based on job title and enact rules to end the practice across the industry

ANGELS, September 22, 2022 /PRNewswire/ — Insurance Commissioner Ricardo Lara must reject Allstate’s offer 165 million dollars Auto insurance rate hikes and its discriminatory two-tier rating system based on work and education, Consumer Watchdog wrote in a letter sent to the Commissioner today. The group urged the Commissioner to adopt rules that would require all insurance companies across the industry to fairly rate Californians, regardless of their job or education level, as he promised to do nearly three years ago. In addition, the group urged the Commissioner to announce a public hearing to determine the additional amounts Allstate owes its customers for inflated premiums during the COVID-19 pandemic, when most Californians drove less.

In total, the rate hikes will affect more than 900,000 Allstate policyholders who face an average 167 USD annual premium increase.

Under Allstate’s proposed job-based rating plan, low-income workers such as custodians, construction workers and grocery store clerks would pay higher premiums than drivers in “professional” occupations the company favors, including engineers with college degrees, who receive an arbitrary 4% rate reduction.

“Allstate’s two-tier system is illegal under voter-approved Proposition 103, which prohibits the use of education and occupation as rating factors,” an attorney told Consumer Watchdog Pamela Pressley. “Instead of continuing to approve discriminatory rating plans by individual companies like Allstate, Commissioner Lara should follow through on his three-year-old promise to end unfairly discriminatory occupational rating practices across the industry.”

The insurance commissioner failed to act on an ordinance proposed three years ago to limit discrimination based on employment and education.

Consumer Watchdog and ten public and community rights organizations have challenged auto insurers’ illegal and discriminatory use of jobs and education in setting rates in February 2019, turning to the Commissioner with a request to adopt normative legal acts regarding the termination of such practices in the industry. in September 2019Insurance Department investigation confirms ‘wide socioeconomic disparities’ created by insurance companies charging surcharges California drivers based only on their occupation or educational status. Three years later, Commissioner Lara has yet to enact a regulation to end the practice, and the last workshop on potential regulation held by the Department of Insurance was nearly a year and a half ago.

Consumer Watchdog also urged the Commissioner to announce a public hearing to determine the amount of additional premium Allstate must pay California policyholders due to driving less during the period when state-run COVID-19 stay-at-home orders were in effect for at least March 2020 to June 2021. According to an analysis by Consumer Watchdog, Allstate has so far made only premium loans totaling less than half the amount the company overcharged customers during that period, leaving hundreds of millions of dollars in debt. The commissioner sent a letter to Allstate October 5, 2021affirming that the “PPA [private passenger auto] Allstate Northbrook Indemnity Company policyholders should have received substantial additional PPA premium refunds or credits.” But to date, the Commissioner has taken no public action to ensure that Allstate policyholders receive the refunds they deserve, according to Consumer Watchdog.

Read the letter of the Commissioner for the Protection of Consumer Rights.

Over the past two months, Consumer Watchdog has challenged proposed auto insurance rate increases by three of the state’s largest auto insurers — Mercury Insurance Company, InterInsurance Exchange of the Automobile Club (“Auto Club”) and GEICO — that also use discriminatory rating systems based on work and education and pay additional amounts for inflated premiums during the COVID-19 pandemic.

Read the 2019 petition from the public and human rights groups.

Voter-approved Proposition 103 requires auto insurance premiums to be based primarily on three mandatory factors — driving safety record, annual mileage and years of driving experience — and prohibits unfairly discriminatory rates. Occupation and education have never been approved by regulation as legitimate rating factors under voter-passed Proposition 103. Proposition 103 prohibits the kind of unfair rate discrimination that can serve as a proxy for income or race.

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SOURCE Consumer Watchdog

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