Should education, job dictate insurance rates?


Auto insurance companies offer drivers all sorts of discounts: good driver, multiple vehicle, good student, to cite a few examples.

In a Wednesday news conference, the Consumer Watchdog group said insurance companies such as Allstate are offering another discount that is wrong and illegal under California's Proposition 103.

"Over the last few years, the staff at the state Department of Insurance have been informally approving insurance companies who have been proposing what they kind of sneakily call 'affinity groups,'" said Harvey Rosenfield, CEO of Consumer Watchdog.

Consumer Watchdog says those affinity groups consist of doctors, lawyers, graduates of prestigious colleges and others; and that those members get a discount, while others not in a group end up paying a surcharge.

"It turns out it's middle-income and low-income people who don't have fancy jobs or didn't get a fancy education who end up subsidizing the rich folks," said Rosenfield.

But the Insurance Information Network of California says Prop. 103 indeed allows discounts to groups, and pointed out an excerpt from the Prop. 103 code.

"It doesn't say anything about having to come before the board," said Pete Moraga, a spokesman for the Insurance Information Network of California. "It just says 'Any insurer may issue any insurance coverage on a group plan without restriction as to the purpose of the group, occupation or type of group.'"

Consumer Watchdog would like the insurance commissioner to be on board with this, and filed a petition for him to take action.

In a call made to the commissioner's office, I was told he would consider it.

But in the meantime, a statement from his office's spokesperson said: "After a public hearing in which Consumer Watchdog was given the opportunity to present its arguments to an administrative law judge, the judge upheld the settlement allowing Allstate to have separate rates for affinity groups and found that the settlement was fundamentally fair, adequate, and reasonable."

Consumer Watchdog says the insurance commissioner will have 30 days in which to respond to their petition. If he rejects or refuses it, then Consumer Watchdog plans to sue under Prop. 103.

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