Senate Bill S7904

                                 BILL NUMBER:  S7904

 TITLE OF BILL :  An act to amend the insurance law, in relation to
prohibiting motor vehicle insurers from discriminating based on
socioeconomic factors

 PURPOSE OR GENERAL IDEA OF BILL :

Prohibits motor vehicle insurers from discrimination on the basis of
socioeconomic factors in determining algorithms used to construct
actuarial tables, coverage terms, premiums and or rates.

 SUMMARY OF SPECIFIC PROVISIONS :

This bill will amend Insurance Law, adding a new § 2616, to prohibit
the use of: (a) sex; (b) marital status; (c) sexual orientation; (d)
age; (e) consumer credit information or credit score; (f) any measure
of a consumer's price elasticity of demand; (g) employment status or
occupation; (h) income level; (i) educational background or education
level attained; (j) ownership or interest in real property; (k) any
other characteristic indicating or tending to indicate the
socioeconomic status of an individual in any classification plans,
rules or rates, rating plans, or modifications issued by any insurer
or insurance company group.

 JUSTIFICATION :
              

In order to comply with New York State law a person operating a car
must have limited liability auto insurance. Currently, auto insurers
doing business may use any range of factors to determine premiums
which leads to adverse treatment of low-to moderate-income drivers.
In the State of New York, insurance companies are using factors other
than a driver's experience and driving record to calculate a drivers'
premium. Insurers use a wide range of socioeconomic and non-driving
factors to determine a driver's premium. Insurers use credit scores,
occupation, level of educational attainment, marital status, and
homeownership in addition to already prohibited factors such as age
and sex. Some insurance companies even use consumer data to determine
whether a customer is likely to shop around, and then sets prices for
its policies accordingly. Using socioeconomic and non-driving factors
that are not inherently related to a person's ability to operate a
car, safely, forces good drivers who are of lower socioeconomic status
to pay more for our State's obligatory auto insurance.

By using rating factors such as these, good drivers of lower
socioeconomic status are not treated equally in the auto insurance
market place.  The Western New York Law Center, among other state and
national organizations, has conducted research looking into the impact
of socioeconomic factors on auto insurance premiums for New York
Drivers. The Western New York Law Center recently did a study that
examined over 5,000 rate quotes for drivers in Western New York. They
found that a woman with a lower socioeconomic status pays as much as
227.11% more for limited liability auto insurance than a driver with
the same driving record and a high socioeconomic status. A man with a
lower socioeconomic status is charged 174.26% more for limited
liability auto insurance than a driver with the same driving record
and a high socioeconomic status. Simply put, when all driving related
factors are held constant, drivers with lower levels of education,
occupational status, marital status, and renters all pay between 1.74
to 2.27 times as much for auto insurance as their higher status peers.

It is time to stop allowing these rating practices which aid in
perpetuating the cycle of poverty.

 PRIOR LEGISLATIVE HISTORY :

New Bill.

 FISCAL IMPLICATIONS :

None

 EFFECTIVE DATE :
Immediately