New Data Indicates Insurers Do Not Apply Auto Group Discounts Equally
Sacramento, CA – California’s insurance commissioner is calling out what he describes as “disturbing disparities” in the ways auto insurers provide premium discounts to customers.
Findings released Tuesday by the Department of Insurance indicate significant differences in what is termed as “affinity group” discounts offered to millions of drivers across the state. These discounts can bring premium reductions ranging from 1.5 to nearly 26 percent.
Some of these are based on certain occupations; others require being members of sponsor groups like professional or alumni associations and credit unions; still, others involve affiliation with the insurer such as being an employee or a motor club member.
Last week in Los Angeles, Commissioner Ricardo Lara presided over what was described the first affinity group fact-finding hearing in the department’s history. His department is responsible for reviewing and approving automobile insurance premiums to ensure they are fair and based on objective factors.
“This disturbing data confirms what we have heard for years, that auto group discounts do not apply equally across California,” Lara stated.
He said his office is now evaluating whether insurer affinity group discounts violate state laws and was prepared to take actions towards ensuring that all Californians have access to affordable auto insurance regardless of their income, education, or ethnicity.
While under the voter-enacted Proposition 103 of 1988, the mandatory factors insurance rating factors include a driver’s driving safety record, miles driven, and years of driving experience, the commissioner may permit optional less-weighted factors.
The collected data indicates customers who get affinity group discounts tend to be in the higher-income zip code areas. Also, affinity group discounts are given out at nearly twice the rate in zip code areas where there are more residents with college degrees. Additionally, those categorized into affinity groups were more likely to live within zip code areas with a predominantly non-Hispanic white population.
While the average for affinity group discount offerings per community came in at 57 percent, the findings indicate 75 percent of those in underserved communities were not associated with any affinity group discount.
According to Lara’s office, communities in this category are those with a percentage of uninsured motorists ten percent above the state average, a per capita income below the 50th percentile, and with a two-thirds or greater minority population.