New York State Proposes Regulation to Combat Discriminatory Auto Insurance Rates

A proposed regulation could help protect New Yorkers from excessive and unfairly discriminatory auto insurance rates.

Following an investigation, the state Department of Financial Services regulation would prohibit insurers from using an individual’s occupational status or educational level as factors in setting rates, unless the insurer demonstrates to the satisfaction of the superintendent of financial services that the use of those factors does not result in rates that are unfairly discriminatory.

“This new protection cracks down on this unfair practice that soaks drivers for not having a college degree or a high-paying job,” Gov. Andrew Cuomo said in a statement. “These metrics are discriminatory, have no relationship to how good a driver you are and should not be used as an excuse to overcharge New Yorkers.”

The department’s  multiyear investigation revealed some insurers in New York use an individual’s education level and occupational status in establishing initial tier placement. As a result, classes of insureds have been placed in less favorably rated tiers, which may lead to higher premiums without sufficient support that an individual’s education level or occupation related to his or her driving ability.

The state did not indicate which auto insurers had used education or occupation to charge some drivers more.

The proposed regulation is subject to a 45-day public comment period. The regulation provides 180 days for insurers that had been using education level and occupational status in initial tier placement and tier movement to amend their multitier rating programs and tier movement.