California Commissioner: Data Shows ‘Disturbing’ Disparities in Auto Insurance Discounts

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The California Department of Insurance on Tuesday released data from an investigation showing what the CDI is calling “wide socioeconomic disparities” in auto insurance group discounts offered to millions of California drivers.

The CDI says the investigation illustrates that many affinity groups disproportionately and adversely affect drivers residing in ZIP codes with lower per capita incomes, lower levels of educational attainment, and larger communities of color.

Some insurers offer lower automobile premium pricing to certain “affinity groups” including white-collar occupations and highly skilled workers, according to CDI data, which shows that one-quarter of Californians receive an affinity group premium reduction ranging from 1.5% to 25.9% depending on the insurer and group.

California Insurance Commissioner Ricardo Lara called the new data “disturbing” after the first affinity group fact-finding hearing in the CDI’s history last week in Los Angeles.

“This disturbing data confirms what we have heard for years, that auto group discounts do not apply equally across California,” said Insurance Commissioner Ricardo Lara. “We are evaluating whether insurer affinity group discounts violate state laws, and I am prepared to act to ensure all Californians have access to affordable auto insurance regardless of their income, education, or ethnicity.”

Mark Sektnan, vice president for the American Property Casualty Insurance Association, issued the following statement in response to the investigation:

“It must be made clear that affinity groups are created by consumers not insurers. California law only allows for the creation of consumer-initiated affinity groups. Insurers are explicitly prohibited from creating these groups. Over the last 30 years, a wide range of organizations have formed and benefited from affinity groups including labor unions, teachers, small business owners and their employees, law enforcement, among hundreds of others.”

Sektnan in his statement argued that if affinity groups are restricted, millions of California drivers already in these programs could be forced to pay more for auto insurance, but if changes are to be made, more affinity groups should be created to encourage greater access.

Among the findings released by the CDI:

This content was originally published here.

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