N.Y. Regulator Takes Aim at Insurers' Use of Job Data

As transparency grows around the types of data insurance comapanies use to rate customers, so does interest from regulators.

A report in the Wall Street Journal states that the New York Department of Financial Services is inquiring about the use of employment data to rate auto insurance customers.

Allstate, GEICO, Liberty Mutual and Progressive have been asked "to explain why the practice of using occupation and education in pricing shouldn’t be prohibited," according to the report. The data are used because of a correlation between certain jobs and risk of auto accident claims.

These kinds of inquiries pop up from time to time. Several states have banned the use of "price optimization," where data about customers' propensity to switch insurers impacts their price at renewal. And, hearings about the use of credit scoring in insurance have been convened as recently as 2010.

To combat this, the Journal article says, insurers are increasingly exploring usage-based insurance and telematics:

Auto insurers have been trying to move from their current basket of correlated indicators to a more precise measurement of customers’ driving behavior. Progressive, Allstate and others are promoting smartphone apps or other devices that track things like how hard customers hit the brakes.