SACRAMENTO, Calif. — The following statement is in response to a petition filed by Consumer Watchdog to ban the use of education and occupation in auto insurance rating. This statement can be attributed to Mark Sektnan, vice president for the American Property Casualty Insurance Association (APCIA).
“The Consumer Watchdog report is based on a misunderstanding of how insurance underwriting and rating works.
“Consumers benefit when insurers use information that enables them to more accurately price auto insurance. All consumers win when drivers who pose lower risk, pay less.
The use of education and occupation is allowed by regulators because these factors are valid predictors of loss and can result in more accurate underwriting and pricing.
Data Tells the Story
“Auto insurers have collected data for decades and have found that the education and occupation of a driver can be accurate variables for predicting the likelihood and severity of insurance claims. Additionally, state agencies charged with enforcing insurance laws in Maryland and New Jersey conducted extensive studies and found these factors to be without question, reasonable to use because they are predictive of losses. Under Proposition 103 in California, all rates are reviewed and approved by the California Department of Insurance. Therefore, all rates currently charged have been thoroughly vetted and found to be appropriate.
“Some insurers that use occupation as a rating factor have found that teachers, police, firefighters, paramedics/EMTs, military service members, and librarians represent lower risks. If these factors could not be used, people in these occupations could be in jeopardy of paying more for insurance.
“If a consumer is not happy with their auto insurance rate, they should take advantage of California’s competitive marketplace and shop around with other carriers.”