7 state auto insurers
to pay $115,500
in fines for using
illegal data

Using such criteria as age,
sex, credit history, gender or
marital status is against Hawaii law

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By Lyn Danninger
ldanninger@starbulletin.com

Seven of the state's largest auto insurers will pay fines totaling $115,500 for using illegal criteria such as credit history, age and length of driving experience in setting auto policy rates.

The seven companies are: AIG Hawaii Insurance Co., Allstate Group, RLI Insurance Co., Maryland Casualty Co. (Zurich), Hartford Underwriters, State Farm Group and USAA Group, the state Insurance Division said. Between them, the companies represent nearly 60 percent of Hawaii's auto insurance market.

Hawaii's auto insurance laws, enacted in 1987, prohibit insurers from using such criteria as age, sex, gender, credit history or marital status when setting rates.

"Hawaii has a clear law that prohibits auto insurers from using discriminatory criteria when determining the premiums motorists are charged," Insurance Commissioner Wayne Metcalf said.

State Farm Director of Public Affairs Director Carolyn Fujioka said although her company paid the fine and agreed to discontinue the underwriting practices called into question by the Insurance Division, it disagrees with the division's interpretation of the law.

"We still maintain our position that we disagree with the Insurance Division's interpretation of the statute," Fujioka said. "Even though we did pay the fine, it certainly was not an admission that we feel we did violate the statute."

Fines for four other auto insurers related to rating practices are pending resolution, Metcalf said. Those insurers are: TIG, HIG, DTRIC and Progressive. Together they cover an additional 10 percent of Hawaii's auto insurance market.

Around 175 companies are licensed to write auto insurance policies in Hawaii although only a small percentage do so.

The investigation into auto insurers' rate-setting practices began in August 2001.

When the Insurance Division began surveying the companies licensed to offer auto insurance most said they did not use discriminatory practices. But audits of insurance policies found companies providing coverage for more than half of the state's motorists were using prohibited criteria, Metcalf said.

The state's findings drew strong reaction from residents. A number of class-action lawsuits have been filed against several of the insurers.