Is A Higher Auto Insurance Rate For Men Twenty Five And Below Discrimination?
If you're a 25 year old male, chances are that you're paying more for auto insurance than your female counterparts pay. Is this a form of gender discrimination?
Yes, the greater the risk of accidents, the higher an insurance company's rate is. But it's not just about what gender you are - it can also depend on where and how old you live. Still, there remains a disparity between the rates men and women pay in certain states….
This week we explore if this type of pricing discriminates against males under 25 years old in Indiana.
Imagine you're sitting in a downtown Indianapolis bar with friends. You're having a good time - until a fight breaks out. What do you do?
In the state of Indiana, if you were to jump in and try to break up the fight, you are technically breaking the law.
A first offense for disorderly conduct can come with as much as six months in jail and/or a $1,000 fine.
However, there is a loophole…
Indiana recently passed a law that says the law cannot be enforced against an individual that was acting in defense of another person.
Indiana's legislature enacted the 'Defense of Others Act' because there were cases were the victims were often charged with public intoxication on top of disorderly conduct, even though they had done nothing wrong. So Indiana took it upon itself to protect those who are just trying to help out their fellow man.
Could it be possible for auto insurance companies to develop similar laws pertaining to rates? That's what many are asking in Indiana right now….
We'll find out with some help from an insurance expert.
Franklin County's insurance commissioner, Don Rone, has worked for the Indiana Insurance Department for 'nearly his whole life' and says that the imbalance between the rates of males and females is a problem that needs to be addressed.
"'It's not fair, it's not right," he said. "People have different driving styles, they have different types of cars and they're probably not going to be in the same accident, but they are going to get more expensive."
Insurance companies use data from personal accidents in order to develop their auto insurance rates. Based on gender and age groupings, there are discrepancies when it comes to rates.
So based on this data, is it fair for men to pay more in auto insurance than females?
Here to tackle that question, we have Joe Stadelman of the Indiana Department of Insurance.
STADELMAN: "A lot of people have asked 'Is there gender bias being applied to auto insurance rates?' Yes. We do see that."
STADELMAN: "There are certain groups who are considered higher risks and they're going to get higher rates. But it is also the fact that a young male driver – if they get into an accident - will be considered more at fault, so they're going to get a higher premium. But then, as they get older, the rate will come down."
So is there any actual data that can be used to show this gender bias?
"Yes," said Stadelman. "It's a fact that males under 25 years of age are more expensive than females of the same age."
When I asked Stadelman about the state's Defense of Others Act, he explained that it had been introduced in order to protect those who break up fights and keep their community safe.
However some insurance experts think it could be possible for auto insurance companies to enact laws based on similar ideologies.
Could something like that help close the gender gap?
"It could be, it could be," said Stadelman. "But right now we don't have such a law."
STADELMAN: "Historically, insurance rates have been based on demographics – how much you drive and your age and your gender. But it's possible to modify that."
STADELMAN: "It's kind of like when you go to a football game and there's a whole bunch of students there – the police would put up barricades so they can't get out easily. We do see that in some cities with women drivers – they get hit less often, so the companies offer them lower rates.
STADELMAN: "So it is possible to modify how rates are set, if you can show that you're a safer driver."
According to Stadelman, the idea is that if you can prove that you are a responsible driver and don't get into accidents, then companies could offer cheaper premiums.
In theory, if someone did have an accident or receive lots of tickets. Then their rates would go up accordingly.
So what about those 'discounts' on gender based rates? The ones that say males pay more than females? Can they be removed?
"Yes," said Stadelman simply. "It's possible."
STADELMAN: "That would be similar to when a company has an older driver but wants to offer them a lower rate – that's done by taking on extra risk. And if you're willing to take on additional risk, then you could get a better rate."
With that in mind, how are companies supposed to know who is taking on the most risk? And how do they go about trying to get that data?
STADELMAN: "There are certain information that the insurance companies can obtain through your driving record."
If someone is getting into accidents or receiving lots of tickets, then their premium will increase accordingly.
STADELMAN: "There are certain information that the insurance companies can obtain through your driving record. They look at accident reports and tickets, at things like that."
So according to Stadelman, insurance companies take a look at your driving history. If you have been in accidents or gotten lots of tickets, then they'll raise your rates accordingly. But if you're a safe driver, then your rates will go down accordingly.
STADELMAN: "If someone has an accident or gets a ticket every year – their rate is going to go up.
Conclusion:
When we were interviewing Franklin County's insurance commissioner, he said that there were many cases of men getting into accidents and being charged with public intoxication because they had done nothing wrong. So he did something about it.
In theory, a defense of others act could be written in auto insurance regulations. This would allow those who are just trying to help an injured party to get their rates reduced based on gender alone. Of course this would lead to some unforeseen complications as well so let's hear what Indiana State Police Captain Doug Dabbs has to say about the whole ordeal….
DABBS: "I think that would be a very, very bad idea.