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Non-Tech : Berkshire Hathaway Class B

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From: David C. Burns	3/21/2006 10:55:43 AM
	of 1652

Geico's Risk Criteria Challenged Insurer Denies That Education and Occupation Are Used to Discriminate By Albert B. Crenshaw and Caroline E. Mayer Washington Post Staff Writers Tuesday, March 21, 2006; D01 According to an internal Geico document, the auto insurer uses drivers' levels of education and occupations in setting insurance rates. As a result, Consumer Federation of America argued, blue-collar workers with relatively low levels of education sometimes are charged almost twice as much as better-educated professionals, based on those criteria. Geico said in a statement that it uses many factors in setting rates and that allegations that education and occupation are being used as the sole criterion are "absolutely untrue." The document cited by the consumer group and a Geico competitor raises long-standing questions about which criteria insurance companies may use as proper gauges of risk and which improperly discriminate against poor people and minorities. Insurers, consumer advocates, regulators and politicians have been struggling for years over such issues, including the use of credit scores in assessing risk. The use of credit scores is permissible in about 30 states but continues to be debated. Yesterday, CFA called on insurance regulators to bar insurers from basing decisions on whether to sell insurance to someone and what rates to charge solely on the applicant's education and income, calling the practice "an underwriting sleight of hand" to avoid existing prohibitions on using race and other criteria. "No single criterion is ever used to determine a customer's rate," Geico said in a statement late yesterday. "Persons of all educational levels and occupations are offered insurance at our best rate based on a variety of criteria. Income or race based criteria never has a role in underwriting or pricing. These allegations are patently false and intentionally divisive." ... more at washingtonpost.com

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