A fourth major auto insurance company in New York has reached a compliance agreement with the New York Department of Financial Services (DFS) regarding DFS’ final regulation against discriminatory auto insurance rates.
Progressive has informed Financial Services Superintendent Maria T. Vullo of its plans to comply with the regulation, joining GEICO, Liberty Mutual and Allstate. Together, the four companies provide coverage to the majority of the private passenger auto insurance market in New York, according to a DFS press release announcing the news.
Under the regulation, which was finalized in December 2017 and made effective in March, private passenger auto insurers are prohibited from using drivers’ occupational status and/or education level as factors in initial tier placement unless the insurer demonstrates, to the satisfaction of the Superintendent, that its use of occupational status and/or educational level attained in initial tier placement or tier movement does not result in rates that are excessive, inadequate or unfairly discriminatory.
The final regulation comes after a multi-year investigation in which DFS found that some, but not all, insurers in New York had used an individual’s education level and/or educational status in establishing initial tier placement without a clear demonstration of the required relationship between these factors and driving ability. As a result, classes of insureds had their rates skewed from inception, regardless of whether the insurer could rationally predict a different risk of loss for that insured, the release stated.
Progressive’s plans for compliance involve eliminating any continuing impact of the company’s prior use of education level attained and/or occupational status in setting auto insurance rates and underwriting new business.
Allstate and Liberty Mutual reached agreements with DFS in December 2017, before the effective date of the regulation. GEICO reached agreement with DFS in March.
Source: New York Department of Financial Services
Was this article valuable?
Here are more articles you may enjoy.