Geico Pays $6M To Settle Insurance Discrimination Claim
by Kathleen Pender, San Francisco Chronicle
Geico will pay $6 million to settle a complaint alleging it illegally discriminated against women, unmarried people, blue-collar workers and those without four-year college degrees by showing them costlier auto insurance policies on its Web site than it showed other potential customers.
“We believe the primary intent was to drive these folks away from Geico to someone else’s Web site or at least make sure they were paying a lot more money if they didn’t drive them away,” said Richard Holober, executive director of the Consumer Federation of America, the nonprofit advocacy group that filed the complaint.
Geico denied the allegations but settled them without admitting guilt. The fine will go to the state general fund, not to harmed consumers, because the insurance code does not permit restitution payments, Holober said.
In February, the federation filed a petition asking the state Department of Insurance to investigate whether Geico was violating Proposition 103 and the Unruh Civil Rights Act.
It said that Geico’s Web site misrepresented the auto insurance options available to certain types of shoppers. Those included shoppers who were good drivers, were not insured at the time they inquired, were not in an executive or professional job and did not have a four-year college degree. At various points in time, the people also had to be either female or unmarried to be shown the misleading options.
Under Proposition 103, insurance companies must offer drivers who meet the state’s “good driver” definition a policy with minimum coverages of $15,000 for a single injury, $30,000 for injury to more than one person in an accident and $5,000 for property damage.
Geico offered these policies to everyone, but when shoppers requested a quote online, they saw different policies advertised as the “lowest limit” depending on their socioeconomic status.
Most good drivers saw a policy with $15,000 for a single injury, $30,000 for multiple injuries and $25,000 for property damage.
But people in the targeted groups were shown “lowest limit” policies with much higher coverage — $100,000 for a single injury, $300,000 for injury to more than one person and $50,000 for property damage. In addition, they were quoted premiums for six months; other shoppers were quoted premiums for one month. By quoting six months, Geico also made it appear as if the coverage was much more expensive for people who could least afford it, Holober alleged.
The department of insurance acknowledged receipt of the petition and “gave it a preliminary review,” Holober said. Geico filed a response, denying the allegations, and asked the department to mediate, which it did before the department took any action.
The settlement is a result of that mediation. “We felt like we came up with a good settlement,” Holober said.
In addition to the $6 million payment, Geico also agreed to change its Web site to provide all good drivers an initial quote for identical coverage, without regard to marital status, gender, educational attainment, occupation or current insurance status.