New Jersey Drivers Still Face Discrimination
Special to the Herald News
By Senator Nia H. Gill
June 16, 2006
As part of auto insurance reforms to enhance competition and maximize consumer choice in the marketplace, the New Jersey Legislature enacted critical consumer protections to prevent the public from being discriminated against based upon race and income.
This week, at a Senate Commerce Committee hearing, it was revealed that GEICO is one of two insurance companies using education and occupation as factors in underwriting insurance and setting rates. It was further revealed that four other companies utilize education or occupation. A federal class action law suit has been filed against GEICO in Minnesota alleging that this practice is discriminatory.
The use of education and occupation in underwriting insurance and setting rates is discriminatory and circumvents our state law which prohibits the use of race and income.
Education and occupation are impacted by socio-economic influences. Not everyone one has the ability or opportunity to receive the same level of education. According to the 2000 Census, 70% of our state residents are without college degrees. The statistics for minorities in New Jersey are even higher. 82% of African Americans and 87% of Latinos are without college degrees. With these statistics it is hard to deny that the use of education does not have a discriminatory and disparate impact.
The use of occupation discriminates against "blue and gray collar" workers by circumventing the prohibition on the use of income.
For example, let's take the following profile that is shared by both a "white collar" administrators with a college degree and postal clerk with high school diploma residing in Montclair:
- a family of four (two small children)
- two drivers: husband and wife
- Age: husband and wife both 40 years old
- Driving Record: No moving violations or accidents in 20 years
- Two vehicles: both 2004 Nissan Sentra 4 door 2.5L.
- Bodily Injury/Property Damage Limits: $50,000/$100,000/$50,000
- $500 deductibles on Comp/Collision.
GEICO's online quote would charge the "white collar" administrator insurance premium with a college degrees $2,350 annually. The postal clerk with high school diploma would be charged $3,932 annually; a 67.3% increase.
Members of the insurance industry also maintain that the use of education and occupation is: (a) discriminatory, (b) circumvents the prohibition of using race and income, and (c) is unnecessary to sustain competitive affordable insurance rates.
If GEICO and others are allowed to use education and occupation, the rest of the industry will adopt the practice.
Given the state of today's economy and the fact that New Jersey has one of the highest auto insurance rates in the nation, the use of education and occupation as factors in underwriting auto insurance poses a serious economic threat to our hard working citizens of our state.
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