California auto insurance rates will no longer factor gender for premiums calculations

California auto insurance rates - man holding car key

At the start of the new year, outgoing Commissioner Dave Jones banned insurers from using gender.

Outgoing California Insurance Commission Dave Jones banned the use of gender to calculate California auto insurance rates. This ban went into effect on January 1, 2019.

The ban applies to rate setting for passenger cars throughout the state with the highest population.

The ban on using gender to calculate California auto insurance rates does not represent the first time a rule of this nature was put into place. That said, this remains an impactful decision as this is the largest auto insurance market in the country. It is also meaningful as this market tends to lead the way in many insurance trends that move across the country. It may mean that other states will follow suit with their own insurance regulations regarding gender discrimination.

“These regulations ensure that auto insurance rates are based on factors within a driver’s control, rather than personal characteristics over which drivers have no control,” said a statement from Jones. According to the California Department of Insurance, auto insurance companies collected about $27.3 billion in premiums in the state.

The California auto insurance rates decision brings the state into the company of six others.

Other states that have prohibited gender discrimination include Pennsylvania, Montana, Massachusetts, Hawaii, North Carolina and some parts of Michigan, according to Washington D.C. watchdog group, Consumer Federation of America (CFA).

That said, California’s new law is also unique from those in other states. The reason is that it also bans accepting, raising rates, or rejecting rates of applicants for auto insurance because of their credit score, job or educational status.

Gender-based pricing in health insurance has also been eliminated in California.

This means that California residents no longer need to state their gender when applying for car insurance. According to the CFA, residents can now have their gender identified as “non-binary”, said a recent CBS News report.

Insurers have reacted by saying that the California auto insurance rates will increase for some drivers because of the change. “Some consumers will have to start paying higher rates,” said American Property Casualty Insurance California auto insurance rates - man holding car keyAssociation vice president, Armand Feliciano. He said insurers are no longer permitted to use the most accurate information to “help safe drivers pay less.”

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