On May 16, Gov. Andrew M. Cuomo announced a proposed regulationto protect New Yorkers from what he sees as excessive and unfairlydiscriminatory auto insurance rates.

The Department of Financial Services (DFS) regulation, issuedafter an extensive investigation, would prohibit insurers fromusing an individual's occupational status or educational level asfactors in setting rates, unless the insurer demonstrates to thesatisfaction of the Superintendent of Financial Services that theuse of these factors does not result in rates that are "unfairlydiscriminatory."

New consumer protection

"This new protection cracks down on this unfair practice thatsoaks drivers for not having a college degree or a high-payingjob," Gov. Cuomo said. "These metrics are discriminatory, have norelationship to how good a driver you are and should not be used asan excuse to overcharge New Yorkers."

As explained in Cuomo's announcement, the use of education andoccupation in determining insurance rates can penalize driverswithout college degrees or who work in low-wage jobs or industries.The result is that drivers with higher education and income oftenpay less for auto insurance with no evidence that they are betterdrivers. The multi-year investigation by DFS revealed thateducation and occupation were used without a clear demonstration ofthe required relationship between these factors and drivingability.

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Rosalie Donlon

Rosalie Donlon is the editor in chief of ALM's insurance and tax publications, including NU Property & Casualty magazine and NU PropertyCasualty360.com. You can contact her at [email protected].