State auto insurance regulations do not list sexual orientation among non-discrimination categories

The proposed auto-insurance regulations issued by Gov. Deval Patrick's administration last month, designed to increase competition in the state auto insurance market, left lawmakers on the Joint Committee on State Administration and Regulatory Oversight scratching their heads about a seemingly glaring omission. One section of the proposed regulations gives a list of factors that insurers may not take into account when setting rates for insurance policies, and another section lists the factors companies may not take into account during the underwriting process. Both lists could easily have been lifted straight from the state's anti-discrimination statutes, and they include race, sex, marital status, religion, national origin and age (except for the purpose of providing a discounted rate for elders) among the prohibited categories. But neither list includes sexual orientation, which has been part of the state's non-discrimination statute since 1989. Rep. Antonio Cabral (D-New Bedford), co-chair of the committee, said the commission is preparing a set of recommendations to send to Nonnie Burns, commissioner of insurance for the state, and one of those recommendations will be to make sure that sexual orientation is listed as part of any other list of banned discriminatory factors.

While the state non-discrimination laws prohibit consideration of sexual orientation when dealing with providers of at least some forms of insurance, Cabral said the committee attorneys believe the existing laws may not cover the auto insurance industry.

"The more we looked into it, it seems the anti-discrimination laws would not protect with reference to sexual orientation," said Cabral.

He said he questioned Burns about the omission of sexual orientation during a hearing on the proposed regulations Sept. 17. He said her answer was that existing state law prohibits discrimination by insurers based on sexual orientation. Cabral said if that is the case he wonders why any of the other factors, also covered under state law, were listed.

When asked about the omission Kim Haberlin, a spokesperson for Burns, whose office drafted the proposed regulations, e-mailed a statement to Bay Windows reading, "The proposed regulation takes a host of socioeconomic factors off the table in an effort to steer insurers to focus on what matters most - a driver's driving record and driving experience. The Commissioner will retain her ability to protect consumers from unfair and excessive rates under the new system." She declined to answer any further questions about the new regulations.

Gary Buseck, legal director for Gay and Lesbian Advocates and Defenders (GLAD), differs with Cabral over his reading of the state non-discrimination statute, saying he believes it would apply to the auto insurance industry.

"It would be my assumption that that is the law and is what the law should be, and I'm assuming it was an inadvertent omission" to leave sexual orientation out of the proposed regulations, said Buseck.

But Buseck said even though existing laws likely protect people from discrimination based on sexual orientation around auto insurance, he said leaving the language out of the prohibited factors sends a negative message to auto insurance companies.

"You reiterate these lists because it stands as a marker of the government policy and its intention to make it clear, in this case to the insurance companies, of the parameters under which they operate," said Buseck. "And when you take one out it seems like you send a mixed message."

Burns highlighted the prohibited factors lists in her August letter announcing the release of the proposed regulations. The letter notes that one of the four guiding principles in the regulations is "fairness to all drivers through the prohibition of the use of socio-economic factors," and the third paragraph of the letter lists all of the prohibited factors for both rating and underwriting.

Cabral said the omission of sexual orientation in the lists of prohibited factors is part of a larger concern he has about the new regulations. Under the current auto insurance system he said insurers are required to look at only three factors in setting rates: a driver's driving record, the number of years they have been licensed, and where they live. In the underwriting process companies can consider only two factors, whether the driver has a valid license and whether they have any outstanding balances on that policy or other auto insurance policies.

By contrast Cabral said the proposed regulations, which unless altered will go into effect in April, offer more wiggle room to insurers by replacing the narrow list of factors they can consider with a list of factors they cannot take into account. He said he worries the new regulations send the message to insurance companies that other than the list of factors in the new regulation, anything else companies might want to take into account is fair game, including proxy factors that companies could use to guess people's race, national origin, age or other prohibited factors without asking about them outright. He said companies could also use people's credit scores in setting rates or deciding who to insure; the proposed regulation contains a one-year ban on using credit reports, and Burns will issue new regulations around credit scores at the end of that year.

"The bigger goal should be in opening it up for competition we should keep the same factors that are used now so that we can be sure that credit scores or any proxies are not used," said Cabral.