The New York Department of Financial Services enacted new regulations this week that are aimed to prevent discrimination in auto insurance based upon education or employment. The sticky point is that many underwriters find this data to be predictive of losses. These two criteria will be generally prohibited from use in establishing initial tier placement, tier movement or premium rate for private passenger automobile insurance in New York.
The DFS left the door open to insurers to prove that the use of these two criteria would not result in unfairly discriminatory pricing. In the case of occupation, this means showing that a particular line of employment has a reasonable relationship to loss without reference to becoming unemployed or income. Insurers have 180 days to comply; the regulation will become effective 90 days after publication in the State Register and provides 90 days to amend multi-tier rating systems.
One unanswered question is whether the NYDFS may suggest that not marketing to certain populations based upon education or employment will result in discriminatory treatment. It will be important to look for clues to the use of this approach.
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