The Star-Ledger

Measure Opposes Limiting Factors In A Driver's Premium

The Star-Ledger — Tuesday, March 7, 2006

Star-Ledger Staff

A state lawmaker yesterday introduced a bill that would ban auto insurance companies from taking New Jersey customers' occupations and education into account when setting policy prices.

Assemblyman Neil Cohen (D-Union) said he believes that basing premiums on those factors unfairly penalizes blue-collar and lower-income drivers.

"Education and occupation has nothing to do with someone's driving record," said Cohen, who chairs the Assembly Financial Institutions and Insurance Committee. "There's no relationship at all except to give someone the opportunity to charge regular folks a higher rate." He said an identical bill was introduced in the state Senate yesterday by Sen. Nia Gill (D-Essex).

The legislation was introduced one week after The Star-Ledger reported that customers of Geico, the state's fourth-largest auto insurer, can pay hundreds of dollars more if they have little education or hold a menial, unskilled job.

Four other companies – Liberty Mutual, N.J. Skylands, Electric and Amex Assurance – also use occupation, education or both in setting their prices, insurance department officials said.

Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, a consumer coalition, said it was "great that he (Cohen) acted so quickly," adding that her group thinks "the practice should be stopped."

Asked about Cohen's bill yesterday, Gov. Jon Corzine said he opposes discrimination but needs to examine the issue more closely.

"I'm sympathetic to that kind of initiative," he said. But the former executive at Goldman Sachs said he would oppose any efforts to prevent insurance companies from using credit histories to set prices.

Geico did not return a call seeking comment yesterday. It issued a statement last week responding to The Star-Ledger story, saying the company routinely evaluates "more than two dozen potential risk factors" and has successfully used occupation and education for years across the country.

"The reason for Geico's remarkable growth in New Jersey is simple – Geico is saving New Jersey consumers money and providing outstanding service 24 hours a day, seven days a week," the statement said.

Magdalena Padilla, president of the Insurance Council of New Jersey, said enactment of Cohen's bill would be a huge setback for the industry less than three years after lawmakers approved a gradual deregulation of the market. "Consumers in New Jersey should not be afraid of competition. It's to their benefit," she said. "'If any driver feels cheated by the premium they are paying, they should just shop around."

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