Auto insurance and education

From the Daytona Beach News-Journal-

DAYTONA BEACH -- Is it fair to make a janitor pay $112 more than a lawyer to insure a car in Florida?

GEICO and a few other insurers say yes, because blue-collar workers are more likely than professionals to have accidents.

State Insurance Commissioner Kevin McCarty has begun looking into the issue, nearly a year after the Consumer Federation of America first urged regulators throughout the nation to scrutinize GEICO's billing methods.

J. Robert Hunter, insurance director for the Washington-based advocacy group, said his organization had documented that GEICO is using a driver's education level and occupation as factors in setting premiums for vehicle owners in nearly every state, including Florida. At least three other insurers -- Allstate, Progressive and Liberty Mutual -- have begun doing the same thing but to a lesser extent.

A GEICO underwriting guide distributed by the federation states GEICO will give its best rates to occupations requiring degrees, such as doctors, lawyers, engineers, teachers and editors. Conversely, the highest rates will be assigned to "minimally skilled clerks, assistants, postal clerks, stock clerks ... route men and long-haul drivers" as well as low-ranking members of the military.

The guide also calls for giving preference to drivers younger than 70 and refusing coverage to any newly licensed driver over 75.

Nationally, the federation found, a 25-year-old executive with a law degree would pay GEICO an average of $527 to insure a 1996 Ford Taurus. A janitor who's the same age and has the same driving record but has just a high school diploma would pay $741, or 40 percent more.

In Florida, the pricing gap is narrower but still significant, the group said. Looking at rates charged by GEICO in Miami, it said the executive would pay $729 while the janitor would be billed $841, a 15 percent difference.

McCarty said the rating method may be a back-door way to make minorities and poor people pay more for coverage. He has scheduled a public hearing for 9 a.m. Feb. 9 at the Larson Building in Tallahassee to hear comments about it.

I doubt insurance companies are using it as a form of discrimination. To me it just seems like another method insurers use to validate the rates they charge.

Just as when insurers use credit ratings, do education levels really make a person a safer driver? Dumb driving is done by all categories of drivers on a daily basis. Janitors may not be as smart as an executive, but TFM would think they would be less distracted by work matters when driving. After all who is more likely to be discussing a customer on a cell phone while speeding down I-95?

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