Provoked by word that GEICO uses education and job levels torate auto risks, an influential New Jersey legislator hasintroduced a measure to bar all insurers' use of suchstandards.

Assemblyman Neil Cohen, D-Union, said he introduced a billyesterday (A2819) that would bar the use of education andoccupation as rating factors in automobile insurance underwriting.The bill would also bar the collection of that information forapplication or renewal, he added.

Mr. Cohen, who chairs the Assembly Financial Institutions andInsurance Committee, took his action in response to a newspaperreport last week that GEICO uses an individual's education and jobstatus in its underwriting of risk.

Use of such criteria, the Newark Star-Ledger article said, candramatically alter the price consumers pay for auto insurance fromthe carrier.

Mr. Cohen said that Sen. Nia Gill, D-Essex, plans to introduce abill similar to his in the state Senate.

"It is unrelated to someone's ability to drive and their filinga claim in the future," said Mr. Cohen. "What if you drop out ofcollege to feed your family, or what if you can't afford to go tocollege because you have to work. Why should these people bepunished?"

"It's just a mechanism so that insurance companies can chargemore money," he stated.

Mr. Cohen said every time insurers come up with a ratingcriteria they create a situation that allows them to charge apremium difference. "It used to be, 'What's your driving record?'That's changed. And these underwriting criteria are being used toproduce more revenue."

He said that if this information were used in any othercircumstance it would be found unconstitutional.

Compounding the issue is the Chevy Chase, Md.-based company'ssilence. He said the company has not commented on the issue.

Mr. Cohen said he has seen no studies from the company or thestate's Department of Insurance and Banking to justify the use ofthe information in underwriting. However, he indicated he would beopen to reconsidering his position based on the facts.

Mr. Cohen said the bill is expected to be sent to the FinancialInstitutions and Insurance committee within seven days.

LeRoy A. Boison Jr., consulting actuary for Pinnacle ActuarialResources Inc. in Garden City, N.Y., noted that carriers areseeking to refine their classifications, looking at nontraditionalrating elements such as occupation and education. But he pointedout that the classifications are part of multiple variables used inunderwriting an individual risk.

"Carriers test as many variables as they can and refine it allas much as they can to get data," said Mr. Boison.

"Everyone is searching for a better mouse trap," he said of thevariables insurers use to rate policyholders.

John Rollins, an actuary with Citizens Property InsuranceCorporation in Tallahassee, Fla., said he has never seen a systemwhere education and occupation dominate the underwriting of apolicy. Underwriting guidelines, he said, are too complex to allowone or two factors such as education or employment to dominate allrisk factors.

"Rating classification is discriminatory," noted Mr. Boison."The question is, is it fair discrimination," he said, adding thatthe viability of the plan must be proven to the state insurancedepartment before it is implemented.

GEICO responded to questions about its rating with an e-mailsaying it evaluates more than two dozen potential risk factors inunderwriting applicants and the factors were approved by thestate's insurance department. The state department of insurance hasnoted GEICO is not the only company using these factors and said ithas also seen data supporting the use of these factors.