Delaware regulator calls for ban on sex-based auto insurance pricing

The Delaware Department of Insurance released a report criticizing the use of gender in auto insurance pricing and concluding that the state should end the practice as six other states have done.

The report found that several of the state’s largest auto insurers charge female drivers 8-9% more than male drivers, when all other factors, including vehicle and driver history, are equal. It says women insured by GEICO and Progressive face the highest cost differentials, and the cost disparity can be as high as 20% under some plans.

State Farm and California Casualty charge the same premium to women and men, while Donegal charges a higher premium to men, according to the study.

Navarro is advocating for Senate Bill 231 under which gender would be banned as a scoring factor. California, Hawaii, Massachusetts, Michigan, North Carolina, and Pennsylvania currently prohibit gender as a scoring variable. According to Navarro, banning the use of gender in Delaware would only require insurers to implement consumer protections that are already in effect in those other states where a number of insurers already do business.

The Delaware/CFA report uses insurance industry pricing data analyzed by the Consumer Federation of America (CFA). Data is from Quadrant Information Services and reflects the August 2020 cost of a policy covering only the state’s mandatory minimum coverage for male or female customers age 35 who have a clean driving record and are otherwise the same in all respects: single, high school graduates, renting their homes, and driving a 2011 Honda Civic LX 12 miles five days a week, 12,000 miles a year.

Insurers criticized the report’s methodology and its conclusions.

“The report’s reliance on website quotes collected by an external vendor is potentially unreliable and may well be an inaccurate representation of what a consumer is actually paying, which is often quite different from website quotes. Website quotes are the beginning of getting the actual premium, not the end,” the American Property Casualty Insurance Association (APCIA) said in a statement.

APCIA maintains that each insurer has their own factors that they use in scoring and that all rating plans are subject to regulatory review to ensure that the factors used comply with all laws, including statutes. anti-discrimination states. “Having the ability to use different rating factors and having more choice rather than less leads to the best outcome for all consumers,” the insurer group said, noting that 43 states and the District of Columbia allow auto insurers to use gender as a rating factor.

The Delaware/CFA report asserts that gender is not a reliable factor in risk-based pricing because insurers disagree on the risk of loss based on gender. For example, based on GEICO’s online rating tool, the study found that a 20-year-old female driver was quoted at a higher rate than a 20-year-old driver, a class often considered the more risky. According to the report, this also illustrates a lack of consistency in the pricing of young men.

“Rating factors must be meaningfully related to drivers’ risk of loss and must not be disproportionately detrimental to customers based on protected classes. Although used by many insurers, gender does not meet these critical criteria. With several companies setting prices suggesting that women are inherently riskier, another assessing that men are riskier drivers, and two companies believing that it is not necessary to take a driver’s gender into account, it is clear that this factor does not meaningfully or accurately capture a driver’s behavior. risk of loss. The inconsistency in the use of gender reveals that carriers’ assertions about the correlation with risk are deeply flawed,” the report states.

Senator Kyle Evans Gay is the lead sponsor of the legislation to be tabled this week. “Most Delawarens would be surprised to learn that gender factors affect premium prices, which should be based on accident data and records,” Gay said.

House Majority Leader Valerie Longhurst supports the change. “This legislation is a no-brainer, and I urge my colleagues in the General Assembly to support it,” Longhurst said.

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