Newly released data showed wide socioeconomic disparities in auto insurance group discounts offered to drivers in the state, according to the California Department of Insurance.
A number of affinity groups "disproportionately and adversely" affect drivers who reside in ZIP codes with lower per capita incomes, lower levels of educational attainment and larger communities of color, according to the regulator's investigation. The regulator said a few insurers offer lower auto premium pricing to some affinity groups, which include white-collar occupations and "highly skilled" workers.
A quarter of the residents in the state get an affinity group premium discount ranging from 1.5% to 25.9%, depending on the insurer and group, the data revealed. Insurance Commissioner Ricardo Lara said the department is looking into whether insurer affinity group discounts are in violation of the state laws.
"This disturbing data confirms what we have heard for years, that auto group discounts do not apply equally across California," he said.
In response to queries regarding affinity group programs' role in the auto insurance market, American Property Casualty Insurance Association Vice President Mark Sektnan said California law only permits the creation of consumer-initiated affinity groups and insurers cannot create these groups.
At a hearing in the week of Sept. 16, a teachers' union, community groups, small businesses and social justice groups asked the regulator not to hinder group auto insurance plans as the move will take away discounts that Californians depend on, according to Sektnan.
"If changes are to be made, more affinity groups should be created to encourage greater access," he said.
