Geico defends auto rating criteria in N.J.

New Jersey state Senator Nia Gill, D-Essex, has sponsored a bill to ban auto insurance companies from taking education and occupation into account when setting policy prices, arguing that the practice is discriminatory and circumvents laws against using race and income to calculate prices.

Gill, who stuck to her view after listening to testimony from insurance companies and the state’s Banking and Insurance commissioner, said such practices pose “a serious economic consequence to working-class families.”

A recent Senate Commerce Committee hearing focused on Geico, the state’s fourth-largest insurer and one of only two that use a person’s job and schooling to determine a driver’s risk of accident. Geico officials said a person’s occupation and education were only two of more than 20 criteria used to set rates and don’t give any indication of someone’s race. They declined to say how much weight the two criteria are given, citing laws that exempt the public disclosure of proprietary information.

Banking and Insurance Commissioner Steven Goldman said the department hasn’t received complaints about the job and education criteria. Goldman said he was unaware that Geico is facing a potential class-action lawsuit in Michigan that alleges the company discriminates against blacks by charging them higher premiums than it charges white customers with the same driving records by using education and job criteria.

Based on 2000 census figures, 70 percent of New Jersey residents don’t have a college degree, according to The Associatd Press However, 82.9 percent of blacks and 87 percent of Hispanics have no college degree.

Ironically, Gill said, a 2005 study by an independent insurance rating company found doctors and lawyers were among the drivers most likely to be involved in an accident. Gill said that according to the study, firefighters and homemakers were the least accident-prone.

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