The California Department of Insurance (DOI) said that it has found “wide socioeconomic disparities” in auto insurance group discounts offered to millions of California drivers.
In a statement, the DOI explained that its investigation illustrated that many affinity groups disproportionately and adversely affected drivers residing in ZIP codes with lower per capita incomes, lower levels of educational attainment, and larger communities of color.
Some insurers, according to the DOI, offered lower automobile premium pricing to certain “affinity groups” including white collar occupations and highly skilled workers. The DOI said that its data showed that one-quarter of Californians received an affinity group premium reduction ranging from 1.5% to 25.9% depending on the insurer and group.
The DOI’s commissioner, Ricardo Lara, called the data “disturbing.”
“This disturbing data confirms what we have heard for years, that auto group discounts do not apply equally across California,” said Commissioner Lara. “We are evaluating whether insurer affinity group discounts violate state laws, and I am prepared to act to ensure all Californians have access to affordable auto insurance regardless of their income, education, or ethnicity.”
Among the findings released by the DOI:
- Customers in surveyed affinity groups tended to be in higher income ZIP codes. Only 26% of Californians in the lowest-earning areas ($22,516 per capita and below) received group discounts, compared to 55% in the highest-earning areas ($49,070 per capita and above).
- Those in affinity groups that were surveyed were more likely to reside in ZIP codes with a higher average educational attainment. Only 28% of those living in areas with the lowest number of college degrees received discounts, compared to 56% for those where half or more had college degrees.
- Those in affinity groups were more likely to reside in ZIP codes with a predominantly non-Hispanic white population. Forty-seven percent of persons living in ZIP codes with a large non-Hispanic white population (62% or greater) received an affinity group discount. Only 29% of those in heavily minority areas (greater than 83%) received discounts.
- Three-quarters of those in underserved communities were not in an affinity group, compared to 57% for the rest of the state.