Washington, D.C. – Consumer Federation of America (CFA) applauded Louisiana Governor John Bel Edwards for signing State Senator Jay Luneau’s legislation to prohibit the auto insurance “Patriot Penalty.” Earlier this year, CFA called on states to take action after it was revealed that, in several states, GEICO would charge higher auto insurance rates to military servicemembers if they had dropped their coverage during a deployment.
“It’s outrageous that any auto insurer would punish servicemembers, because they dropped coverage while deployed overseas,” said CFA’s insurance expert Doug Heller. “While this patriot penalty is still allowed in many states, it has been ended in Louisiana and Governor Edwards and Senator Luneau should be applauded for standing up for consumers and soldiers.”
Earlier this year investigative reporter Lee Zurik uncovered evidence that GEICO was applying a patriot penalty in twenty-one states. CFA then sent a letter to all state insurance commissioners, urging them to block this rating practice, or, if needed, support legislation to prohibit it. In March Vermont Insurance Commissioner Michael Pieciak issued a bulletin declaring the “patriot penalty” an act of unfair discrimination and banning this practice. Additionally, California has long-banned insurers from surcharging drivers based on a break in coverage, whether due to deployment or other reasons.
CFA also noted Governor Edwards’s comments in his bill signing announcement, in which the Governor highlighted persistent injustices in auto insurance pricing in Louisiana: “right now auto insurance companies can still legally increase rates based on a person’s gender, credit score and marital status.” CFA research has shown that the use of socio-economic factors such as these, as well as rating based on drivers’ occupation, level of education, and homeownership status, make auto insurance significantly more expensive for low- and moderate-income Americans and continue to have a disparate impact on communities of color.
“Blocking the Patriot Penalty is an important consumer protection, but the Governor is right to note that much more has to be done to stop insurance company discrimination and the high rates that unfair pricing produces for those least able to afford the coverage required by law,” said Heller.
Contact: Doug Heller, 310-480-4170