Key Takeaways

• Income proxies like credit score, education, and job status raise rates without improving driver safety.
• Low-income drivers often face inflated premiums that limit mobility, employment, and economic opportunity.
• Income-based rating factors disproportionately impact minority and underserved communities.
• Reform efforts face resistance due to political pressure and low public awareness of discriminatory practices.
• Organizations like CURE advocate for fair pricing models that eliminate salary-based insurance discrimination.

Eric Poe, Esq., CPA, is a Princeton, New Jersey-based entrepreneur and CEO of CURE Auto Insurance, where he has led the company’s mission to provide fair, no-fault auto insurance free from discriminatory pricing practices. With more than three decades of experience in the insurance industry, Eric Poe has been an outspoken advocate for reform, opposing the use of income-based factors – known as income proxies – in determining insurance rates. He has testified before state and federal legislative committees, including the U.S. House Financial Services Committee, on issues related to fair auto insurance pricing and consumer protection.

Under his leadership, CURE Auto Insurance has eliminated the use of credit scores, education, and employment status as rating factors, ensuring equitable access to coverage. Drawing on his expertise, Eric Poe offers an overview of auto insurance income proxies and their impact on fairness and affordability.

A Brief Overview of Auto Insurance Income Proxies

All motorists in the state of New Jersey must carry a car insurance policy to legally operate a motor vehicle. Most drivers know that maintaining a clean driving record – free of accidents and ticketed traffic violations – can help to lower their car insurance rates. However, drivers may be unaware that various factors can influence the amount that they pay to insurance providers. A few of these factors include a driver’s employment status, credit score, and educational level.

These factors can combine to have a serious economic impact on New Jersey residents. For example, a person who lacks a four-year college degree, rents an apartment, and has a less-than-perfect credit score may face unusually high insurance costs. Drivers who do not have a high-paying job may need to forego car insurance and limit their employment opportunities to jobs they can reach by foot, public transportation, or bicycle. With fewer job opportunities, many New Jersey residents will struggle to make the money needed for even the most basic necessities which can impact their ability to drive or pursue other life goals.

Auto insurance experts refer to these often overlooked factors as “income proxies,” as they all relate to a driver’s salary. New Jersey drivers have many reasons to object to these qualifiers, primarily because no substantial evidence supports the idea that these factors correlate to driver safety. Instead, they stand to drive profitability for insurance providers: drivers with low incomes either find themselves forced to pay unnecessarily inflated insurance rates, or insurance companies provide coverage to only the wealthiest drivers. Furthermore, these policies disproportionately impact drivers from minority communities and households with low incomes, who historically earn less money and attend college at lower rates.

The impact of income proxies on auto insurance rate-setting first came to light in 2004 following a series of whistleblower reports. Over the course of the following two decades, numerous organizations, consumer advocates, and drivers have come out in support of auto insurance industry reform. Many professionals from the legal and insurance sectors admitted to having never heard of these controversial insider pricing practices, which represent a bipartisan issue not only for New Jersey motorists, but all drivers in the United States.

Unfortunately, many policymakers have resisted the idea of taking on the auto insurance industry. Numerous representatives have openly opposed legislation to end salary-based, rate-setting practices.

While some politicians may fear losing the support of insurance corporations, there remains a continued lack of voter support for industry changes, as many constituents remain ignorant about the concept of insurance industry income proxies. Forward-thinking policymakers and other supporters of auto insurance industry reform must draw more attention to the issue of income proxies, which can result in drivers paying more for car insurance simply because they hold a blue-collar job or lack a four-year degree. Otherwise, politicians will continue to avoid the issue, waiting for pressure from constituents who are completely unaware of the insurance industry’s discriminatory practices.

Drivers in New Jersey who are interested in opposing salary-based auto insurance discrimination can reach out to organizations such as Citizens United Reciprocal Exchange (CURE), an auto insurance provider.

FAQs

What are income proxies in auto insurance?

Income proxies are non-driving factors such as credit score, education level, and employment status used by insurers to set rates. These factors reflect a person’s income more than their driving behavior.

Why are income proxies considered unfair?

There is no credible evidence linking income-related factors to safer driving. Using them raises costs for lower-income drivers, often creating barriers to employment and mobility.

How do income proxies impact New Jersey drivers?

Drivers without degrees, high credit scores, or high-paying jobs often pay significantly more for insurance, making coverage unaffordable and limiting access to transportation and economic opportunities.

Why hasn’t legislation to end income proxies passed?

Some lawmakers are reluctant to challenge insurance industry interests, and many voters remain unaware these discriminatory pricing practices exist, reducing public pressure for reform.

How can drivers oppose income-based insurance discrimination?

New Jersey drivers can support reform efforts by engaging with organizations like CURE Auto Insurance, which advocates for fair, non-discriminatory rate-setting practices.

About Eric Poe

Eric Poe, Esq., CPA, is the CEO and Chief Marketing Officer of CURE Auto Insurance, based in Princeton, New Jersey. With over 30 years of experience in the insurance industry, he advocates for fair auto insurance practices that eliminate the use of income-based factors in rate-setting.

A respected voice in legislative reform, he has testified before state and federal committees on consumer protection issues. Mr. Poe holds degrees in accounting from the University of Colorado and law from Seton Hall University School of Law.