Are Discounted Car Insurance Rates a Form of Unfair Pricing?

discounted car insurance

A California consumer advocacy group faces an uphill battle against a recent court decision to approve Allstate Insurance’s application for special car insurance pricing programs in the form of discounts to “affinity groups.”

These groups include individuals belonging to specific organizations, such as college alumni associations. Sacramento’s Consumer Watchdog advocacy group has had limited success in fighting discounted car insurance rates for these special groups.

History of Special Discounted Car Insurance

In the past, California insurance commissioner Dave Jones has been a strong ally of Consumer Watchdog. Jones has cooperated with the organization on several consumer protection measures, including the law Consumer Watchdog believes prohibits affinity group auto insurance rates. The law, Proposition 103, was authored by the organization’s founder, Harvey Rosenfeld.

Rosenfeld argues that affinity group marketing focuses on giving price breaks to the wealthy.

“It’s middle-income and low-income people, who don’t have fancy jobs and didn’t get a fancy education, who end up subsidizing the rich folks who get these special breaks,” said Rosenfeld.

Consumer Watchdog argued in a public hearing against affinity-discounted car insurance rates, but still must fight against the measure. After hearing the group’s arguments, the administrative law judge upheld Allstate’s affinity group discounts.

Company’s Overall Auto Insurance Rates Decrease

For now, California consumers as a group won’t see auto insurance rates go up. The ruling also ordered Allstate Insurance to bring its rates down by 0.2 percent, rather than raising rates by the 6.1 percent the company originally requested.

Consumer Watchdog, in the meantime, has filed a petition with Commissioner Jones to reconsider. If Jones does not enforce the provisions of Proposition 103 by disallowing these discounted car insurance for affinity groups, the consumer advocacy group says it will be forced to file suit.