Geico Rates Can Be Based On Education

CourierPostOnline — Tuesday, March 6, 2007

Gannett State Bureau

TRENTON — Insurance companies, many newly attracted to selling coverage in New Jersey, can continue to use education and jobs as factors in setting rates, after a movement sputtered Monday to eliminate those items as proxies for race.

"We'll live to fight another day. . . . Sometimes you have to win them incrementally," said Sen. Nia Gill, D-Montclair, sponsor of the measure that failed to gather support in the Senate Commerce Committee, of which Gill is chairwoman.

The decision is seen as a victory for the insurance industry, which sent delegates and lobbyists to oppose the measure. Not all insurance companies use those factors, but a report last week by Citizen Action singled out Geico's use of the practice.

Gill's was the lone yes vote. Her Democrat colleagues abstained, as did one Republican, while the second Republican on the committee voted no. "I am very proud to vote yes," said Gill.

Geico's legislative counsel, Hank Nayden, arguing the insurer uses education levels and jobs to set rates but does not allow either to be decisive among 18 other factors. "This is totally false," he said of such assertions.

Gill had pressed Nayden to reveal what weight Geico placed on education and career path, but he refused to do so, saying no insurer would disclose the core of its business model.

Nayden said 40 percent of Geico's best-rate customers have what he called lower levels of education and less-than-high-paying jobs.

Citizen Action had found wide disparities in Geico rates when making more than 400 online applications for coverage, always changing just two factors – education and job. The group said that invariably the better-educated person got a lower rate quote.

Nayden called the Citizen Action survey inaccurate. "Citizen Action has not supplied the data behind the survey," he said.

Over the decades, auto-insurance companies fled from New Jersey, seeing it as overregulated to the point they could not make money here. But reforms since 2003, giving sellers of the coverage more freedom to operate, have brought back many companies and intensified competition.

Gill more than a few times made the point that robust competition had nothing to do with her issue of rate-setting.

"We are extremely disappointed," said Citizen Action program director Ev Liebman.

Debate turned interesting Monday when Sen. Raymond Lesniak, D-Elizabeth, who usually votes with Gill, said he did not believe a case had been made to convince him using education and jobs translated to race.

In trying to make her case, Gill had said 82 percent of black people and 87 percent of Hispanics in New Jersey lack a college degree. Gill made vivid her numbers by announcing how many people in each of her committee colleagues' districts lacked college degrees. The math stayed in the 70 and 80 percent range until she mentioned Sen. Gerald Cardinale, R-Demarest, whose district had only 54 percent of voters lacking an undergraduate degree.

"And they still vote for him," cracked Lesniak.

Cardinale voted no. Lesniak abstained, as did Sen. Nicholas Scutari, D-Linden, and Sen. Robert Singer, R-Lakewood.

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