Geico has agreed to pay a settlement concerning accusations of discriminatory practices
Geico, one of the most prominent auto insurance providers in the United States, has agreed to pay $6 million in order to settle bias charges made against it, which were first raised by the Consumer Federation of California. The charges have to do with the insurer discriminating against drivers regarding their gender, education level, and occupation when they sought out quotes for policies online. The insurers will be paying the $6 million settlement over the course of three years.
Insurer may have been targeting certain demographics to charge more for insurance coverage
According to the charges, Geico is accused of targeting specific demographics when providing quotes online. Women, those with low income, and those not working in an executive position were hit with inflated rate quotes. The insurer is also accused of offering better coverage terms to drivers it considered more desirable. Using socio-economic information to price insurance coverage, auto or otherwise, is illegal in some states due to the discriminatory implications of using such information.
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Company will no longer use certain information to price coverage
Per the settlement, Geico will no longer consider education level and occupation to determine the limits of its auto insurance coverage for drivers. The insurer will also submit to audits of its website twice every year, allowing regulators to ensure that the company avoids problems in the future. If Geico fails to comply with the provisions of the settlement, the insurer will have to pay $12 million. Geico does not admit to any wrongdoing, but it has agreed to comply with the settlement for the time being.
State continues to fight for more transparency from insurers
According to California Insurance Commissioner Dave Jones, drivers are entitled to fair estimates concerning their auto insurance coverage. The state is working to improve the way that insurance companies provide consumers with information and more insurers are falling under scrutiny regarding their practices in pricing the coverage they offer to consumers. Some insurers may be employing risky practices in order to recover from significant losses they have faced.