On May 16, Gov. Andrew M. Cuomo announced a proposed regulation to protect New Yorkers from what he sees as excessive and unfairly discriminatory auto insurance rates.

The Department of Financial Services (DFS) regulation, issued after an extensive investigation, would prohibit insurers from using an individual's occupational status or educational level as factors in setting rates, unless the insurer demonstrates to the satisfaction of the Superintendent of Financial Services that the use of these factors does not result in rates that are "unfairly discriminatory."

New consumer protection

"This new protection cracks down on this unfair practice that soaks drivers for not having a college degree or a high-paying job," Gov. Cuomo said. "These metrics are discriminatory, have no relationship to how good a driver you are and should not be used as an excuse to overcharge New Yorkers."

As explained in Cuomo's announcement, the use of education and occupation in determining insurance rates can penalize drivers without college degrees or who work in low-wage jobs or industries. The result is that drivers with higher education and income often pay less for auto insurance with no evidence that they are better drivers. The multi-year investigation by DFS revealed that education and occupation were used without a clear demonstration of the required relationship between these factors and driving ability.