Auto insurer wants to hike rates on older drivers

Downeasters have a bone to pick with Flo, the perky Progressive insurance spokeswoman. The car insurer wants to raise rates for certain Maine residents just because they got older.

State Rep. Henry Beck, who is also chairman of the legislature's committee on insurance and financial services, has submitted a proposed amendment to his state's insurance code that would prohibit insurance companies from charging older Mainers higher premiums based solely on age, according to Portland Press Herald, a Maine newspaper.

Beck's proposal was triggered by the fourth-largest car insurer, Progressive, when it attempted to impose age-based increases on older drivers in the state. Each state operates independently when it comes to car insurance rules and regulations.

The increase would be substantial, particularly since car insurance rates are already on the rise. Progressive's hypothetical example showed that a 65-year-old driver would pay 6 percent more just because he or she celebrated a birthday.

It would especially hurt Maine drivers given that this rural state has few transportation alternatives to driving, state officials said. More than 20 percent of Mainers over age 65 are still on the road, according to state motor vehicle statistics.

Progressive's plan has already run into opposition from the state's AARP director, who opposes any action that could limit healthy seniors' mobility. Even the Insurance Information Institute (III), which represents the industry, told the Portland paper that Progressive's rate request appears to be without precedent.

"Mature drivers are some of the safest on the road," said Loretta Worters, the III's vice president of communications.

And J. Robert Hunter, director of insurance for the Consumer Federation of America, agreed. "The focus for insurers should be on driving record, mileage and type of car -- things clearly related to risk," he said. "Age is questionable. And all the actuarial data I have seen indicates less risk for the older drivers."

Progressive says age isn't the only criterion it is looking at in proposing to raise rates on Maine seniors.

"As an industry practice, rates are developed using well accepted actuarial principles that consider numerous factors relating to a person's risk of loss," a spokesman said by email. "A major factor is loss experience, which Progressive and industry data clearly shows deteriorates as people grow older."

Beck's proposal may be a case of "belt and suspenders," since the state already prohibits insurers from boosting existing customers' premiums as they age, and the state Bureau of Insurance already denied Progressive's initial request in June for a rate hike.

But at Progressive's request, the bureau plans to hold a hearing in August on whether the insurer could charge new customers of a certain age higher rates without crashing into the law. Passing his amendment, which would take effect next July, would remove all doubt about that, according to Beck.