Saving You Money For Life

In April of this year, a class action suit was filed against Geico Auto Insurance claiming that their criteria for rates are discriminatory. It seems that Geico asks each insurance applicant about their level of education and current income. As part of their applicant evaluation process, Geico allows lower premiums for people with more education and higher incomes. The lawsuit sees these criteria as a screening process that is discriminatory against minorities, specifically African Americans.

According to the Consumer Federation of America, nationally Geico charges lower income people 41 percent more for comparable auto insurance than people in higher income brackets. Geico sells insurance in 43 states and the District of Columbia, and is the fourth largest auto insurer in the country.

The race issue in this case is a compelling one, but seems more like one of those class action suits that has been cooked up by an enterprising law firm. The most blatant display of mistreatment here is centered on the notion that a grocery clerk is, de facto, going to be a higher driving risk than a bar owner or a retired school teacher. Or, to flip the coin, that retired school teacher is a better bet than a kid who couldn’t afford to go to college.

I’m sure that Geico has lots of studies and PowerPoint presentations and reams of numbers that prove the validity of their assumptions. So what? It’s an issue of fairness. Benjamin Disraili once said that, ‘There are three kinds of dishonesty. Lies, damned lies, and statistics.’

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