At this point, anyone who watches TV or streams shows is almost certainly familiar with insurance giant GEICO’s gregarious gecko. The affable mascot promises affordable insurance in a matter of minutes. But what the rogue reptile doesn’t tell you is that the company has a nasty habit of charging female drivers with clean driving records more – a lot more – than male drivers for the same coverage. We know that people think the opposite is true – we’ve polled it – but over the last several years Consumer Federation of America (CFA) and others have been testing premiums and found that women, on average, pay higher auto insurance rates.
How can this be? The answer: Auto insurance companies use numerous non-driving factors to raise and lower premiums on people with perfect driving records. These factors include someone’s credit score, education level, type of job, and gender. Since every state except New Hampshire requires drivers to purchase auto insurance, states have a special responsibility to make sure this mandatory purchase is affordable and that consumers aren’t harmed by unfair discrimination. But CFA has found widespread discrimination tied to these non-driving pricing practices, including on the basis of gender in auto insurance, which make insurance less affordable for many safe drivers, especially the most financially vulnerable.
Consider data from the state of Delaware. CFA acquired auto insurance premium data charged by ten large auto insurers in the state for every ZIP code in Delaware from Quadrant Information Services. Using the pricing algorithms that insurers file in each state, the data set presents the premium that would be offered to a 35 year old male or female driver who was unmarried, had a high school diploma, rented their home, and had a perfect driving record. They also drove a 2011 Honda Civic LX on a 12 mile commute five days a week, for a total annual commute of about 12,000 miles. Finally, they purchased Delaware’s minimum required auto insurance coverage.
The results? CFA conducted a joint report with the Delaware Department of Insurance and found that the insurers charge women 8% more on average than men in Delaware. The average premium for men is $1,314, but for women it is $1,417. Seven of the ten insurers charge women more, as illustrated below.
GEICO and Progressive are especially noteworthy—GEICO charges women 21% more, and Progressive charges women 20% more. And in some cases the discrimination is even more egregious. CFA conducted a test of premiums quoted by GEICO on its website to examine this discrimination in more detail. We found that a 20 year old male driver living in the ZIP code 19901 in Dover was quoted $3,198 per year for insurance. But a 20 year old female driver in the same ZIP code, identical in every way except for her gender, was quoted $3,951 per year, or $753 more, just because of her gender. GEICO: your gender could cost you $753 more on car insurance. Maybe not as funny as the lizard, but more accurate.
Auto insurers claim that someone’s gender is connected to risk, and therefore a legitimate factor to base premiums on. But there are two problems with this: first, not all insurers in Delaware discriminate against women (one charges men more and two charge the same premium regardless of gender), and those that do discriminate do so to significantly different degrees. And second, an analysis of crashes on Delaware public roadways found that more men were involved in auto crashes than women, despite the fact that there are more women residents and drivers in Delaware. As a result, women are paying higher premiums on average despite there being no evidence of some inherent (or even coincidental) increased riskiness.
Your insurance premiums should be based on your driving record, not your gender. On Tuesday, March 7th, the Delaware Senate Transportation Committee held a hearing on SB 231, sponsored by Senator Kyle Gay. This bill would ban gender from being used to overcharge auto insurers, stopping this unfair discrimination and reducing costs for consumers. Six states—California, Hawaii, Massachusetts, Michigan, North Carolina, and Pennsylvania— already prohibit auto insurers from using gender, and insurance markets function perfectly well in all those states. CFA testified in support of this proposal and urged the Committee to support it.
If Delaware passes this bill, consumers will pay less for auto insurance and gender discrimination would be banned. And GEICO would have to actually save women money on car insurance, instead of overcharging them.