Groups Pushing Auto Insurance Reform to ‘End Discrimination Against Lower-Wage Californians’

Millions of California drivers will see auto insurance savings with the adoption of regulations presented at a California Department of Insurance workshop on Tuesday that would “end discrimination against lower-wage Californians,” according to the Consumer Federation of America and the Consumer Federation of California.

California Insurance Commissioner Ricardo Lara’s rules would require insurers to make their group discount programs more equitable and eliminate the practice adopted by some insurers of charging higher premiums to blue-collar and unemployed drivers, even if they have perfect driving records.

“Group insurance discounts are meant to empower consumers who purchase their car insurance through a group to which they belong, but some insurance companies have deformed this idea into discriminating against safe drivers in lower-wage occupations,” J. Robert Hunter, CFA Insurance director and former Texas Insurance Commissioner, said in a statement. “The draft regulations will stop insurance companies from punishing Californians who don’t have the right job title, while strengthening the ability of consumers to band together and get cheaper coverage.”

The American Property Casualty Insurers Association, which has said the regulations could axe discounts for millions, deferred comments on the regulation to a broad coalition opposing the proposal.

The coalition, Californians United to Protect Insurance Discounts, stated the “draft regulations would eliminate group car insurance discounts for millions of teachers, firefighters, paramedics, small business owners, healthcare workers and other Californians struggling to recover from the global pandemic – increasing car insurance costs by hundreds of dollars every year.”

The group discounts allow insurance companies to offer discounts directly or through associations and organizations to drivers of similar professions or categories who are proven to be at lower risk of auto accidents such as teachers, nurses, government employees, healthcare workers, secretaries, firefighters, police officers and others, according to the coalition.

Those opposing the proposal include: National Association of Home Builders; California African American Chamber of Commerce; California Hispanic Chambers of Commerce; California State Firefighters Association; Los Angeles Civil Rights Association.

The regulations address an alleged loophole in which some insurers have created occupation-based groups that CFA says is intended to offer lower-priced coverage to white-collar professionals while charging higher rates to Californians with blue-collar jobs or who are unemployed.

The rules would also enable consumers to get group discounts through their organizations and require that insurers make those group discounts more accessible to lower-income communities of color, who face higher rates due to discriminatory occupation-based insurance pricing.