Former Agent Says AAA Illegally Discouraged Insurance Sales to New Drivers

We Wonder if AAA’s Insurance Managers Were Ever Teenagers Themselves

Maybe they sprang fully-formed from a handbook on loss abatement? A former insurance agent at the Auto Club of Southern California (a division of AAA) alleges that the company steeply decreased commissions on sales made to customers without prior insurance.  This practice, currently illegal in California, is intended to discourage drivers without an insurance record from obtaining coverage. Cherry-picking insurance customers is a savvy business move, but has far-reaching consequences. If a previously-uninsured motorist is discouraged from purchasing coverage, they may end up going without. The danger of accidents involving uninsured motorists goes up, as do the premiums that provide coverage for such accidents.  

Discrimination against new drivers in California was ended in 1988 as a result of Proposition 103. The proposition was written by Harvey Rosenfield, attorney and founder of the nonprofit group Consumer Watchdog – and the same attorney who is now representing Jill Rogers, the former AAA agent.

Rosenfield describes new-driver discrimination as “a form of insurance redlining that had nothing to do with a motorist’s driving record, or even whether the person had never bought insurance in the past because they didn’t own a car, were a new driver, or had lived in a city with excellent mass transit and hadn’t needed a car. It particularly harmed people with limited incomes and minorities.”

Auto Club Spokesman Jeff Spring denies that any illegal activity has occurred, saying "the policies that we have in place now and the activities for our agents we have in place now, we believe, are in compliance.”

We’ll be following the case as it heads for court. It’s interesting to note that Californian voters recently defeated a ballot initiative that would have once again allowed insurance companies to charge customers varying rates based on their history of maintaining coverage.

Kicking Asphalt

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