New Jersey legislation intended to bar the use of occupation andeducation in setting motorists' auto insurance rates failed tosecure enough votes to clear a Senate committee yesterday.

The measure, which insurance advocates argued would set backauto reform legislation, was pushed by Sen. Nia H. Gill,D-Montclair, who argued the use of such factors in underwriting hasa discriminatory impact on racial minority and low incomegroups.

Sen. Gill chairs the Senate Commerce Committee. On the questionof whether to release the bill for full Senate action the panelvoted 1-1 with three abstentions. The bill remains in thecommittee.

The measure (S 1714) would bar the use of occupation andeducation in personal lines underwriting.

Richard Stokes regional manager for the Property CasualtyInsurers Association of America, before the vote had issued astatement decrying the bill as "a major step backward from the autoinsurance reforms passed in 2003 that are helping to increasecompetition and drive down rates."

"Consumers don't benefit when arbitrary restrictions are placedon actuarially justified underwriting factors," he said.

Vince Matthews, Sen. Gill's legislative and communicationdirector, said at yesterday's hearing legislators were concernedthat the state Department of Banking and Insurance was unable tosay whether discrimination does or does not take place usingoccupation and education as a criteria in underwriting.

"There may be a disparate impact on minorities, and thedepartment has never done a study," said Mr. Matthews. "There-inlies the issue."

Jim Gardner, a spokesman for the DOBI, said the departmentexamined the actuarial soundness of the companies' underwriting andfound no fault with it. He said neither the companies nor thedepartment collects data on race or income, noting that to do sowould be illegal.

"It is a blind process," he said.

He added that companies use a number of different ratingcriteria in their underwriting and that no single criterion wouldoutweigh all the rest.

"Companies have spent decades collecting information anddeveloping these models," said Mr. Gardner. "They've done so withthe intent to get an edge on the competition."

Sen. Gerald Cardinale, R-Cresskill, who voted against the bill,said he did not believe the use of occupation or education wasbeing used as a proxy for racial discrimination. He added that itis possible an argument could be made that any of the criteria usedby underwriters could have an adverse effect on minorities.

"Unless there is a very good reason to do so, the legislatureshould keep its nose out of the business models of insurers in NewJersey," he said.

New Jersey Citizen Action said it performed a survey of 400 ratequotes and that those who did not have a college degree received aquote 19 percent higher than those with a degree. Individuals innonprofessional jobs received quotes 27 percent higher than thosein a professional job.

Mr. Cardinale called the report "a big waste of time."

"If you are less of a risk, then that is the way it is; it's thelaw of the marketplace," he said, noting that the companies havenever hidden their use of data.

The bill's future remains in doubt; however, Ms. Gill, who ischairwoman of the committee, can reintroduce it anytime. "There areno plans for the bill at this moment," said Mr. Matthews.

Mr. Cardinale said the vote is an indication that it may not gofurther.

A companion bill in the Assembly (A 2819) was referred to theAssembly Financial Institutions and Insurance Committee a yearago.

Meanwhile, controversy over legislation to limit education andoccupation in underwriting will likely continue in Florida where aspokesman for the Office of Insurance Regulation said legislationmay be proposed to deal with the perception of discriminationagainst minority and low-income policyholders.