New York auto insurance rate calculation factors may soon drastically change

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A new proposed rule would stop education and employment from affecting a policyholder’s premiums.

State Financial Services Superintendent Maria Vullo proposed a change to the New York auto insurance rate calculations. The change would stop insurance companies from using a motorist’s education level or job from being used as a factor in determining that driver’s rates.

The only exception is if the insurance company can prove the job status or education level directly affects driving.

The proposed New York auto insurance rules change would only allow insurers to continue using education level or job status under one circumstance. That auto insurer would need to prove that a specific education status or particular job has a “reasonable relationship” with a person’s driving habits.

This change to NY insurance regulations has arrived at a time in which state regulators determined that many – though not every – auto insurer in the state have been discriminating against people who have lower incomes and education levels. Governor Andrew Cuomo’s office stated that some insurance companies force those individuals to pay more for their coverage.

The proposed changes to the New York auto insurance would remove that discrimination.

The New York Public Interest Research Group issued a report based on 2014 data showed that someone who did not have a collage degree and whose job was lower than a managerial level would pay 19 to 41 percent more for their auto insurance coverage than someone with higher education and the same job and driving record.

“Requiring insurers to openly justify the use of education and occupation data in setting rates will ensure that New Yorkers are not being charged higher rates due to factors outside their control as drivers,” said Vullo in a statement released to the media.

Auto insurance companies in New York are resisting the proposal, stating that this would force all drivers to have to pay more money.

Ellen Melcionni, president of the New York Insurance Association, explained that an individual’s education level and job status “have been mathematically proven to be correlated with risk.” She added that “Limiting underwriting factors can penalize drivers and drive up the cost of insurance for everyone.”

The NYPIRG supports the New York auto insurance rate calculation regulation change and sent a letter to the Department of Financial Service three years ago requesting an investigation into the practice.


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