Group Says Geico Unfairly Stresses Job, Education In Rate Setting

Newsday — Wednesday, February 28, 2007

Associated Press Writer

TRENTON, N.J. — A leading automobile insurance company unfairly emphasizes a person's job and education level when determining rates, a New Jersey citizens watchdog group alleged Wednesday – charges the insurance company quickly dismissed.

New Jersey Citizen Action said it obtained 449 rate quotes from Geico's Web site and found the average quote for those without a college degree was 19 percent higher than for those who have one. It also found the average quote for those with a blue collar-type job was 27 percent higher than those with a professional job.

Some comparisons found differences as high as 61 percent for someone with a lower education level than with a college degree, even with all other factors the same, said Eve Weissmann, who coordinated the analysis.

"We think that this is a horrendous thing," said Phyllis Salowe-Kaye, New Jersey Citizen Action's executive director.

Citizen Action called for New Jersey to make it illegal for automobile insurers to decide rates based on education level and employment.

"The use of education and occupation is a proxy for race and income," said Sen. Nia Gill, D-Essex, who has sponsored such legislation.

Dick Barber, treasurer for the state NAACP, decried the findings as "anti-poor, anti-urban, anti-rural and anti-immigrant."

"This practice needs to be halted before more auto insurers begin using it or are forced to use it to stay competitive," said Assemblyman Neil Cohen, D-Union, another bill sponsor.

Geico adamantly denied the charges. Rynthia Rost, a Geico vice president, said the company uses 25 factors to legally and validly decide rates, including driving history, vehicle type, gender, age, where a person lives and whether a person is married, but not race and income. Each utilized factor, she said, is an accurate predictor of insurance risk.

Geico has about 616,000 New Jersey customers, making it the state's third-largest insurer, Rost said.

"What we have here is the knowledge that we provide the lowest-price insurance in the state and around the country," Rost said.

She deemed the study "inflammatory" and "polarizing."

"We write competitively in New Jersey," Rost said. "We're doing a good job in New Jersey, clearly, and somebody doesn't like it."

Geico is facing a class-action lawsuit in U.S. District Court that alleges the company discriminates against blacks by charging them higher premiums. The lawsuit contends the higher premiums are based on the education and occupation criteria. Florida regulators also recently held hearings on use of those criteria.

"Across the nation people realize what this is doing to them," Gill said.

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