PA Insurance Commissioner: Insurers Must Justify Increases In Auto Insurance Rates

The Pennsylvania Insurance Department recently announced a new policy calling for insurers to justify why they charge higher auto insurance rates for unmarried or widowed drivers. The policy comes in response to recent reports regarding insurance carriers who charge higher auto insurance rates for unmarried or widowed women than they do for married women with identical driving records. Pennsylvania Insurance Commissioner Teresa Miller told reporters that the hikes in auto insurance rates “can’t be just because you lost your spouse.”

Study Sparks Auto Insurance Rates Policy

The change in policy came from a study by the Consumer Federation of America on changes in auto insurance rates. The study examined how carriers increased auto insurance rates for female drivers after they reported losing their husbands. Researchers gathered data from ten cities and several carriers based on whether a female driver listed her status as single, married, divorced, separated or widowed. Among the major carriers surveyed, only State Farm did not change its rates based on marital status.

CFA Exec: Higher Auto Insurance Rates for Widows “Unfair and Inhumane”

The CFA study submitted identical driving data to the websites of each carrier to create the rate quotes, changing only the applicant’s marital status. The study found that some carriers charged single women higher auto insurance rates than married women, regardless of their status. The data also showed some instances in which carriers charged widows higher auto insurance rates than women who were single for other reasons. Stephen Brobeck, CFA’s executive director, told reporters that “hiking rates on women whose husbands die seems both unfair and inhumane.”

Details of Auto Insurance Rates Policy

The new policy calls for the state insurance commission to review auto insurance rates if the carrier proposes to raise its premiums for a widow or widower based solely on the loss of a spouse. The department released a consumer advisory stating that, “if the insurance company cannot provide statistical support” for its practice of raising auto insurance rates for widows and widowers, then it would “not approve the rate change and will require the insurer to continue to use the lower rate.”

Insurance Industry Defends Higher Auto Insurance Rates

A spokesman for the Insurance Information Institute told reporters that the data points to married couples as having lower risk factors. These reduced risks lead to lower auto insurance rates. James Lynch, chief actuary for the Insurance Information Institute, told reporters that the insurance industry favors married couples with lower auto insurance rates “because that’s where the data points.” He also disagreed with the “shading” of the CFA report, stating that widows were quoted higher auto insurance rates in only two of the 54 scenarios outlined in the study.

Source: Allentown Morning Call

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