| Author |
Message |
    
Phenixrising
Citizen
Username: Phenixrising
Post Number: 1434
Registered: 9-2004
| | Posted on Tuesday, February 28, 2006 - 8:01 am: | 
|
Geico Charges Blue-Collar Workers More For Auto Insurance
POSTED: 9:56 am EST February 27, 2006
TRENTON, N.J. -- Education and occupation matter when it comes to what customers of New Jersey's fourth-largest auto insurer pay, according to a published report.
Geico considers professional and college-educated customers less of a risk than blue-collar workers, so those drivers pay less, The Star-Ledger of Newark reported in Monday's editions.
"It is really unconscionable," Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, told the newspaper. "I would love to know who they are marketing themselves to? Are they writing letters to doctors and lawyers? Everybody should be putting down that they are Rhodes scholars."
Assemblyman Neil Cohen, D-Union County, said he will introduce a bill to ban the practice.
"It is discriminatory, and it has no relationship to how somebody drives," said Cohen, chairman of the Assembly Financial Institutions and Insurance Committee. "None of that should be considered."
However, according to the state Department of Banking and Insurance, the practice of using education and occupation to determine rates is acceptable if the company proves those items correlate to losses.
"They were able to justify it. We didn't have a reason to say 'No, you can't,"' department spokeswoman Jaimee Gilmartin said. "I don't know that we've gotten a single question or complaint with regard to use of education or occupation."
The Star-Ledger of Newark found that a 30-year-old single, male lawyer with a master's degree would pay $1,686 a year for coverage from Geico, but $2,880 if he was a janitor with a high school diploma.
In a written statement released Monday, the company said it evaluates "more than two dozen potential risk factors" in the rate-setting process. Geico said it has used these underwriting factors across the country and that all have been approved by the New Jersey Department of Banking and Insurance.
 |
Nohero
Supporter
Username: Nohero
Post Number: 5102
Registered: 10-1999
| | Posted on Tuesday, February 28, 2006 - 8:28 am: |
|
Great cartoon about this, in this morning's Star-Ledger -
 |
Cynicalgirl
Citizen
Username: Cynicalgirl
Post Number: 2406
Registered: 9-2003
| | Posted on Tuesday, February 28, 2006 - 9:51 am: |
|
I guess I don't see why anyone's surprised. Most of the car insurers use a lot of factors that many would consider unrelated to actual driving. Some of these include credit score, gender and similar. I'm with Liberty Mutual, and have been for 20 years, largely because I got a good rate when working at a university. Yes I went to college but I made diddly squat. Seems we were in an occupational "teacher pool" and that across the board, being in that pool correlated with lower risk. I was lucky enough to stay in that pool even when I changed jobs and moved to NJ.
Teachers don't make what doctors and lawyers do, and I suspect that they are riskier drivers and therefore pay more for car insurance, even Geico's. Unless I'm missing something, this article may be inappropriately inflammatory (or maybe not). I wonder how people would feel if the comparison was janitor to elementary school teacher?
Just a thought... |
themp
Supporter
Username: Themp
Post Number: 2604
Registered: 12-2001
| | Posted on Tuesday, February 28, 2006 - 10:21 am: |
|
I've heard they don't like to pay claims too much either. |
Phenixrising
Citizen
Username: Phenixrising
Post Number: 1436
Registered: 9-2004
| | Posted on Tuesday, February 28, 2006 - 10:26 am: |
|
themp
You are correct. My mother inlaw had Geico for years until she was in an accident, (which she wasn't at fault). Geico dropped her like a hot potatoe!
|
Rastro
Citizen
Username: Rastro
Post Number: 2420
Registered: 5-2004
| | Posted on Tuesday, February 28, 2006 - 11:16 am: |
|
Phenix, that's how they keep rates low. They only insure "good" drivers, which essentially means if you have an accident or ticket in the passt 5 years (they may have increased that time period), you get dumped, or get a major premium increase.
Any insurance company that has a "preferred" rate will drop you or raise it when you have an accident.
I don't like it either, but I can understand why they do it. |
gj1
Citizen
Username: Gj1
Post Number: 311
Registered: 11-2003
| | Posted on Tuesday, February 28, 2006 - 11:23 am: |
|
Phenix - Dan Quail called, he wants his "e" back. |
Phenixrising
Citizen
Username: Phenixrising
Post Number: 1439
Registered: 9-2004
| | Posted on Tuesday, February 28, 2006 - 1:02 pm: |
|
Dan Quail called, he wants his "e" back.
potato
 what was I thinking!
Rastro,
I can understand upping the premium, but dropping her for one accident? BTW… she had no tickets and has a decent driving record. I just felt that her situation was pretty unfair. |
Just The Aunt
Supporter
Username: Auntof13
Post Number: 4131
Registered: 1-2004
| | Posted on Tuesday, February 28, 2006 - 9:19 pm: |
|
What they are doing in a sneaky was is discriminate. Chances are most of the people living in the Inner Cities such as Newark, East Orange, Orange, Irvington, are not 'Professionals with college degrees.' |
TomR
Citizen
Username: Tomr
Post Number: 1011
Registered: 6-2001
| | Posted on Tuesday, February 28, 2006 - 9:54 pm: |
|
JTA,
And your point is...?
TomR |
Just The Aunt
Supporter
Username: Auntof13
Post Number: 4132
Registered: 1-2004
| | Posted on Tuesday, February 28, 2006 - 10:42 pm: |
|
Tom
My point is exactly what it says. To avoid insuring those living in the Inner Cities, they come up with this college degree bologna. There are plenty of professions that don't require a college degree, police and fire personal, for example.
If you've ever sat in Traffic Court listening to some of the cases, you will find most of those arrested for drunk driving are college educated white collar professionals. (At least they were the dozen times I sat there). Just because someome has a college degree, I don't think we should assume they are a better driver then someone without.
|
TomR
Citizen
Username: Tomr
Post Number: 1013
Registered: 6-2001
| | Posted on Tuesday, February 28, 2006 - 11:51 pm: |
|
JTA,
Your prior post was unclear as to whether your claim of discrimination was based upon the "fact" that the impact of GEICO's premium policies fell upon some discrete group; or whether it is GEICO's intent to place an unjustified financial burden upon said group.
Is GEICO seeking to avoid insuring inner city residents because they're poor; because they're racial minorities; or because they're poorer risks?
Thanks for clarifying.
I will not contest your conclusions regarding drunk driving based upon your superior (or at least, more frequent) observations. (Twelve times in traffic court. Damn! What risk group are you in?)
What was the breakdown for non-alcohol related violations?
TomR |
Phenixrising
Citizen
Username: Phenixrising
Post Number: 1443
Registered: 9-2004
| | Posted on Wednesday, March 1, 2006 - 8:22 am: |
|
Chances are most of the people living in the Inner Cities such as Newark, East Orange, Orange, Irvington, are not 'Professionals with college degrees.'
JTA
I'm sure Corey Booker and others beg to differ on that assumption. There are a fair amount of professionals WITH college degrees living in these areas. Ivy Hill (part of Newark) has a good amount of white collar professionals.
|
Bob K
Supporter
Username: Bobk
Post Number: 10844
Registered: 5-2001
| | Posted on Wednesday, March 1, 2006 - 8:30 am: |
|
Traditionally New Jersey has been a hard state for personal auto insurers to operate in. Rate regulation was extremely tough. As a result quite a few large carriers exited that business in our state.
There has been somewhat of a seachange at the Department of Banking and Insurance down at Trenton. To get carriers to enter the state they have begun to allow rating based on credit scores, occupation, etc. The rates and rating factors still have to be actuarialy justified, however.
On a pure political level there are two schools of thought on this. First, all rating based on age or territory where the vehicle is garaged is basically discrimination and should be abolished, increasing the rates for those in suburban, white collar areas and the more rural counties in south Jersey. The second is that using actuarial rates based on age, rating territory, credit scores, etc. helps to provide an open market and brings more availability to the customers.
Take your pick. |
Cynicalgirl
Citizen
Username: Cynicalgirl
Post Number: 2410
Registered: 9-2003
| | Posted on Wednesday, March 1, 2006 - 9:27 am: |
|
Given that actuaries (if they're both good at it, and current) are kinda like successful oddsmakers/bookies, it is their job to discriminate based on data and odds of something happening or not. To me, so long as their equations are not arbitrarily including non-pertinent factors, they should be permitted. With homeowner's insurance, they're going to find greater risk to those living in flood plains, hurricane alley or in high rises at greater risk than those living in little brick houses in more ordinary terraine, in neighborhoods with lower lower property crime. I can't see what's wrong with that, given that their goal is to rate risk, and charge accordingly. Smokers pay higher life insurance rates than do non-smokers. Same thing.
Now if they used factors that did not correlate to risk, that would be illegal and bad math/poor evaluation. We may not like the results, or what they seem to say, but they are what they are. That's why that one company, at least for a time, offered individual in Texas (I think it was, and I think it was Allstate) the opportunity to have a monitor put on their car. The idea was that one's risk would be individually and actually monitored, and one would pay accordingly -- as opposed to as a member of a risk pool. You speed consistently, your rate goes up and so on. |
Just The Aunt
Supporter
Username: Auntof13
Post Number: 4151
Registered: 1-2004
| | Posted on Wednesday, March 1, 2006 - 12:27 pm: |
|
Tom-
Not 'superior' gawd far from it. I spent 12 days in 12 different courts in Essex, and Morris County to gather information for a class project. Not sure what the breakdown was for non alcohol related offenses. I was more interested in the breakdown of men vs women, and general age group; then what 'sentence' the individual received. We noticed the first and second time, most of those there for DUI and DIW were 'professional' looking people.
|
Bajou
Citizen
Username: Bajou
Post Number: 54
Registered: 2-2006
| | Posted on Wednesday, March 1, 2006 - 1:05 pm: |
|
Dear Geico haters:
I have been with Geico now since the first day they were allowed to do business in NJ. My car insurance is USD 560 dollar cheaper then it was with Allstate.
I am also in banking and I can tell you it is not unusual to have education and occupation matter. Hey have you guys tried to apply for a mortgage!!
Education is not tied in because they like laywers better then truckdrivers. To create a riskprofile you need to use as many statistic facts as possible and education is a very easy fact to come by.
I was also told by Allstate that it's a shame they have to dump me but (even thought I am in finance) I live on the wrong side of South Orange and they are no long interested in my business since my car was stolen 8 times in 14 months.
I am know that places like Kearney, Jersey City, Newark (blue collor) neighborhoods have a bigger problems with car damage and theft then Maplewood. I think at this point we should all remember that not to long ago there was not a single insurance company who wanted to touch Jersey with a ten foot pole.
Bajou |
Rastro
Citizen
Username: Rastro
Post Number: 2468
Registered: 5-2004
| | Posted on Wednesday, March 1, 2006 - 1:38 pm: |
|
JTA, if Geico doesn't want to insure people who live in inner cities, I believe they can simply do that. Given that, in general, inner city communities have higher crime rates than suburbs, it would be easy for them to use that as a yardstick, without resorting to convoluted schemes. I can just imagine the conference room conversation:
Manager: "Hmmm, so we don't want to insure poor inner city people. What are some basic traits they share?"
Peon 1:"They're not white!"
Manager" "Nah, it would be illegal for us to say we don't insure people who aren't white. How can we get around that?"
Peon 2: "How about we give them a standardized test! Everyone knows whites do better on those."
Manager: "I don't think our customers would be willing to take the SATs to get insurance. Anything else?"
Peon 3: "We could just ask how many years of school they have? Everyone knows level of education is tied to your race and whether you live in the inner city or the suburbs."
Manager: "Excellent idea! Now we can limit ourselves to suburban white people, and not look like racists!"
Peon 4: "Or we could just not insure people in high crime areas."
Manager: "You're just not creative..." |
Bob K
Supporter
Username: Bobk
Post Number: 10846
Registered: 5-2001
| | Posted on Wednesday, March 1, 2006 - 3:29 pm: |
|
Redlining is the practice of not insuring people in certain areas and is against the law. Oddly, credit scoring is not really income based. It is about how much debt you carry and how timely you are in paying your bills. Many moderate income people have good credit scores. Occupation and education, which are tied together, I think is a little more dicey.
|
Klg
Citizen
Username: Klg
Post Number: 47
Registered: 4-2005
| | Posted on Wednesday, March 1, 2006 - 4:01 pm: |
|
I had Progressive at one stage while I lived in Queens. The next year they pulled out of "urban New York". At least in that instance, they insured on a purely geographic basis. Interestingly, I ended up with Geico after that and paid twice what I had previously paid with all other factors being equal. |
Cynicalgirl
Citizen
Username: Cynicalgirl
Post Number: 2411
Registered: 9-2003
| | Posted on Wednesday, March 1, 2006 - 4:22 pm: |
|
Don't forget car type. Last time I went to buy a car, I called the insurance co and asked them if one would cost me more than the other in terms of insurance. On the face of it, they seemed similar enough, but things like likeliness to be stripped, how new the model, turbo stuff and so on come into it. |
Bajou
Citizen
Username: Bajou
Post Number: 61
Registered: 2-2006
| | Posted on Wednesday, March 1, 2006 - 4:34 pm: |
|
Cynical girl,
tell me about it. I finally got rid of my Jeep Cherokee Sport. # 1 break in car (very easy to break into them). High parts resale value.
Oh and by the way did you know that color affects it to. Red and silver are hot colors.
Rastro: I am white, female and live in a high car theft area. My insurance was never cheap but it skyrocketed when my neighborhood was deemed high car theft area cause I live next to a train station parkinglot and my car getting stolen 8 times in 14 Months is just bad. They managed to steal my car two years in a row on my birthday. Sadly the last time they stole it the two kids in the car got into a serious car accident and one of them was severely injured and fell into a coma for quite a while.
|
Rastro
Citizen
Username: Rastro
Post Number: 2477
Registered: 5-2004
| | Posted on Wednesday, March 1, 2006 - 6:44 pm: |
|
Bajou, the coma sounds like Karma to me. |
Cynicalgirl
Citizen
Username: Cynicalgirl
Post Number: 2414
Registered: 9-2003
| | Posted on Thursday, March 2, 2006 - 6:53 am: |
|
Some of you folks might like articles on this site: http://www.iii.org/
http://www.insurance.com/
These guys are not bad at explaining what goes on in the wubbulous world of actuaries and rates, and being an informed consumer of this stuff. |
Closed: New threads not accepted on this page