The Delaware State Legislature adjourned for the year without the House taking action against Senate Bill (SB) 231, which called for a ban on the use of gender as a rating factor in personal car insurance.
The measure was based on research conducted by the Consumer Federation of America which claimed that many insured women in Delaware are charged more than men, even when all other factors are the same. If they had signed the law, it would have required Delaware’s car insurance companies to review how they price their personal car insurance for all drivers. Six states – California, Hawaii, Massachusetts, Michigan, North Carolina and Pennsylvania – already have similar laws in place.
“Delaware State Legislature and the Department of Insurance have the right and responsibility to govern and regulate how insurance companies operate within the State of Delaware,” wrote Triple-I Chief Insurance Officer Dale Porfilio in response to SB 231, approved by the Delaware Senate in April 2022. But In his letter to Delaware Insurance Commissioner Trinidad Navarro, he raised several concerns with the underlying research, including:
Website Quotes Vs. issued policies. While the internet and electronic processing of quotes have dramatically improved the speed and accuracy of quotes, Porfilio wrote: “Many details can be changed for the part of quotes that ultimately become issued policies, making quotes not 100 percent accurate for issued prizes.”
Occasional hypothetical insured vs. number of actual insured. The report studied hypothetical 35-year-old drivers and then concluded the full breadth of female and male drivers in the state of Delaware.
Aggregation over postcodes. The pricing methods are refined to very specific territorial definitions, which vary from insurer, and the report does not describe how the sample was aggregated over postcodes.
Porfilio explained that a consequence of adopting SB 231 would be a redistribution of who pays how much premium, with most of the premium increases paid by female policyholders (especially at younger ages), and a majority of the premium lowering male policyholders.
Critics of American car insurance companies’ pricing practices have expressed concern that certain classification factors discriminate against certain groups. Triple-I has explained in several contexts how American car insurance companies use a variety of rating factors to correctly price policies. These factors must comply with the laws and regulations of the state where the car insurance is sold, and eliminating someone can force less risky policyholders to pay too much and allow those at greater risk to pay less than they should.
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