Do Jobs Really Pass Crash Test?
Auto Rate Discounts Seem to Defy Data

Your profession could land you a discount on auto insurance, but you might be surprised which occupations get a break -- or annoyed about which ones don't.

Several auto insurers have started granting discounts from 5 to 15 percent to attract doctors, engineers and firefighters, among others, in certain states, including California.

But salespeople, politicians, clergy, homemakers and others with a lower-than-average frequency of crashes do not usually get an occupational discount.

Connecticut regulators don't know of auto insurers offering such direct discounts yet in this state, where annual premiums for a two-car household can reach or top $1,500.

However, Farmers Insurance Group says it plans to start offering a 5 percent auto insurance discount next year in Connecticut to engineers, firefighters, police officers, doctors, nurses, scientists and teachers.

For years, many insurers have given price breaks to people who belong to ``affinity groups,'' which include professional associations and groups such as AARP and AAA. The newer job-related discounts, though, are available to certain consumers directly, not requiring membership in an organization.

The occupation discounts are among insurers' latest ways of attracting the drivers they think pose the lowest risk or the highest profit potential.

Yet some of the occupations on their most-wanted lists, such as physicians and architects, have some of the highest accident rates, according to a study released last fall. San Francisco-based Quality Planning Corp. studied data that state motor vehicle departments gave insurers.

In a look at 40 job categories, Quality Planning found that doctors had the second-highest frequency of accidents. Only students were worse.

Doctors racked up 109 accidents a year for every 1,000 members of that profession. Lawyers weren't far behind, with 106, followed by architects, with 105.

Quality Planning didn't study why certain groups are accident-prone, but Daniel Finnegan, the firm's president, said others have suggested that doctors' long and stressful working hours play a role in crashes.

As for lawyers, some theories are that they lead ``aggressive lives'' and spend much time on their distracting cellphones while driving, Finnegan said.

Least likely to have accidents are farmers, firefighters, pilots, politicians, homemakers and clergy, the Quality Planning study found. Politicians, however, scored the fourth-highest incidence of speeding tickets.

Firefighters understandably have been granted premium discounts. But why would insurers give doctors and architects a break when their profession is prone to crashes?

Insurers can make money on physicians and architects by selling them multiple kinds of insurance, which could offset doctors' higher-than-average risk on the road.

Insurers consider the potential profitability of a policyholder's whole account, explains Robert Hartwig, senior vice president and chief economist of the industry's Insurance Information Institute.

An insurer, for example, would likely cover a doctor's home, not just cars, Hartwig says. The physician might also insure a boat or recreational vehicle, and buy an ``umbrella'' liability policy from the company to protect assets against lawsuits. Some companies would also try to sell life insurance to the physician.

``Frequently the marketing emphasis will trump the actuarial'' data, says J. Robert Hunter, director of insurance for the Consumer Federation of America and an actuary.

Another reason that doctors might get discounts is that individual companies, such as California-based 21st Century Insurance, find the physicians they happen to insure aren't so problematic.

21st Century, which doesn't sell auto insurance in Connecticut, pioneered discounts for engineers, educators and scientists in the 1960s. More recently the company introduced discounts for architects, physicians, veterinarians, pharmacists, dentists, computer professionals and certified public accountants.

The Quality Planning study looked at accident frequency, not the average cost of the accidents. So it could be that some professions have more accidents, but not necessarily the costliest ones, industry officials note.

If you question the fairness of occupation discounts, you're not alone.

``It goes against the American ethos that `I want to be judged completely on my individual risk,' '' Finnegan says. Yet insurers group drivers into all kinds of categories -- age, gender, marital status, for instance -- to assess risk on a broad basis, he notes.

If insurers' data show that certain occupations have a higher accident rate than others, they ought to come up with hypotheses and test them to explain why, Hunter says.

Auto insurers aren't surcharging people because of occupation, but the discounts cost everybody more, Hunter points out. That's because, over time, insurers' base rates would rise slightly to offset the revenue lost through discounts, he explains.

Occupation used to be a bigger deal in insurance than it is now. A few decades ago, it was not unusual for auto insurers to keep what amounted to blacklists of occupations they didn't like.

Undesirables included ``roustabouts'' -- transients who worked on docks, oil rigs and such -- carnival workers, actors and actresses, and poolroom employees.

The lists are ``something that gathered a lot of dust on the shelves of many insurers,'' Hartwig says.

Occupation is not the ``determining factor'' for any insurer in deciding whether to accept a driver or at what price, Hartwig says. ``I think today that its prominence in underwriting has fallen as other factors have gained prominence.''

Today, for instance, auto insurers' decisions are based partly on scores computed from people's credit information. Insurers say data show that drivers with bad scores are more likely to have accidents -- a much protested conclusion.

Many insurers still ask for your occupation, often only for actuarial studies. Others may consider your job, along with many other factors, in deciding what pricing tier to put you in, with the most ``preferred'' tier getting the lowest rates.

Discounts by occupation took off in California in recent years because the state restricts the factors that auto insurers use to figure premiums.

Travelers Property Casualty Corp. believed it had to offer a 12 percent occupational discount in California to remain competitive there because other auto insurers were giving discounts, company spokeswoman Jennifer Wislocki said. Travelers -- now part of The St. Paul Travelers Cos. Inc. -- doesn't give such discounts elsewhere.

Farmers Group now offers the auto insurance discounts in 28 states, and plans to expand to 41 states. The company is also developing an occupation discount for homeowner's insurance.

Liberty Mutual offers profession-related discounts on auto insurance only in California and Hawaii.

Esurance Inc., which sells auto insurance online in some states, launched a discount program in California in March for people who work in education, engineering, math or natural science.

Copyright, 2004, the Hartford Courant. Reprinted with permission.