WASHINGTON–Credit unions and CUSOs that offer auto insurance in California will need to ensure compliance with a new regulation in the state that eliminates the
use of gender when setting insurance pricing.
Proponents of the regulation had been pushing for an end to what they said was a discriminatory practice that has allowed insurers to charge women with good driving records more, on average, than men with similar driving records.
The rules, which took effect on Jan. 1 will lower premiums charged to women in California. Currently, six other states also prohibit gender discrimination in auto insurance rating – including Hawaii, Massachusetts, Michigan (though there are exceptions for a significant portion of this market, according to the Consumer Federation of America), Montana, North Carolina, and Pennsylvania.
“Our research over the years has uncovered a variety of discriminatory pricing strategies by auto insurance companies, but when we found that insurers had begun charging women more, that really surprised me, especially because the gender-based pricing was so erratic,” said J. Robert Hunter, CFA’s Director of Insurance and former Texas Insurance Commissioner. “Given the odd and unfair prices we see in the market, gender should be banned across the country as not determinative of risk and, like race, gender should not be used in pricing auto insurance.”
According to the CFA, which supports the new regulations, the rules will also eliminate the pricing problem faced by transgender drivers who, under a new California law, can have their gender identified as “non-binary” on California drivers licenses as of Jan. 1.