Two of Louisiana’s largest auto insurers – Progressive and GEICO – charge blue collar and unemployed drivers and those without a college degree significantly more for coverage than these insurance giants charge customers with higher salary and education levels. The two companies account for about a quarter of the $4.8 billion that Louisiana drivers spend on auto insurance every year.

According to new research, the companies typically charge between 7% and 15% more to good drivers who didn’t go to college and don’t have high paying jobs. The harshest penalties cost good drivers hundreds of dollars a year: Progressive raised its premium quote to a Baton Rouge resident by 18% – $244 per year – because he was out of work, and GEICO raised the rates on a safe driver who didn’t finish high school by $726 a year, or 60%, compared with a driver with a Master’s degree.

“You see a real bias against drivers in Louisiana just because they don’t have the right pedigree for some of these insurance companies, even if they have a perfect driving record,” said Douglas Heller, a nationally recognized insurance expert, who conducted the research for the Bayou Brief. “It is really outrageous that the state’s Insurance Commissioner allows these big insurers to punish Louisianians because of their job title and level of education. Why should lawyers and bankers get better prices than auto mechanics and store clerks?”

* For basic auto liability coverage for a 30-year-old male driver with a perfect driving record, living in Baton Rouge. All other factors are held constant in each test.

The research highlights a problem that impacts a significant proportion of Louisiana drivers, yet one that was apparently unknown to Louisiana Insurance Commissioner Jim Donelon. In testimony before the House Civil Law and Procedure Committee last month (and shown in the video below), Commissioner Donelon claimed that insurance companies in Louisiana are not allowed to use a driver’s occupation when setting rates, but he was corrected by his own chief actuary during the testimony. He then proceeded to assert that insurers could not use a driver’s education level for pricing, only to be corrected by his Department’s actuary again. 

Rather than advocating to make illegal these unfair pricing practices that he thought were already prohibited, Commissioner Donelon stood with insurance companies and the Louisiana Association of Business and Industry (LABI) to lobby for the so-called Omnibus Premium Reduction Act, which focused almost exclusively on limiting the ability of people injured in accidents to get their claims paid and which failed in the state Senate last week. 

Thus far, his department has not offered any reform that would make insurance prices fairer for average Louisianians.

“Getting rid of the insurance penalty for having the wrong job title or not going to college won’t alone solve high insurance rates in Louisiana, but it would be a start. Pair it with getting rid of the credit score penalty and we’d be making some real headway. Unfortunately, the powers in Baton Rouge want us to believe that you can fix auto insurance rates without changing insurance company behavior, but that’s just not true,” said Heller.  “It’s ironic that these insurance companies have been claiming to fight for working folks by bashing lawyers in the state Capitol, but then giving a special premium discount to lawyers all while pummeling financially-strapped Louisianians with higher rates.”