Out of Alignment


Overview of Study Findings

Female motorists in Texas with perfect driving records often pay significantly more for auto insurance than male motorists with identical driving records and other characteristics that insurers use to price auto insurance, according to Texas Appleseed’s research. Testing also found companies use added pricing penalties based on marital status, with unmarried women paying the highest average rates.  This finding is particularly troubling because of the for all drivers to purchase a basic auto insurance policy.

These surcharges appear to violate Texas law.

Texas Insurance Code §544.002 (a)(2).

It is unfair discrimination for an insurance provider to, “charge an individual a rate that is different from the rate charged to other individuals for the same coverage because of the individual’s… age, gender, marital status, or geographic location,”unless, “[the] charge is based on sound underwriting or actuarial principles reasonably related to actual or anticipated loss experience.” 

An assessment of online premium quotes from five large auto insurers operating in eight Texas cities found that all but one of the tested insurance providers alter rates for drivers based solely on their gender and marital status. The five auto insurers included are Allstate, Farmers Insurance, Geico, Progressive and State Farm.

On average, woman pay $56 more per year than men for the mandatory minimum auto insurance. Single and divorced women pay an even higher premium compared to similarly situated men. They pay, on average, $80 more per year, and the penalty, just for being female and unmarried, can reach $224 more per year for basic auto insurance coverage.

Other findings from the testing include:

  • Progressive and Farmers charge widowed females premiums that are 12%-13% higher than widowed men; by comparison State Farm maintains the same rate.
  • In the City of Houston, women with perfect driving records pay, on average, $75 more than men with the same record, same vehicle, and same address — the highest average female driver penalty of any of the eight cities studied.
  • Farmers Insurance had the highest gender disparity in pricing, charging women with perfect driving records an average of $144 more than men with the same record, same vehicle, and same address.
  • In contrast to other insurance companies tested, State Farm appears to comply with state law and does not change rates based on gender or marital status.

Basic Liability Insurance Required by Drivers to Comply with Texas Law

A policy must include:

  • $30,000 for bodily injury to or death of one person in one accident;
  • $60,000 for bodily injury to or death of two or more persons in one accident; and
  • $25,000 for damage to or destruction of property of others in one accident.

Required coverage may exclude the first $250 of liability for bodily injury to or death of one person, the first $500 of liability for two people, and the first $250 of liability for property damage or destruction of property of others. 

Study Methodology

Using insurance companies’ websites, Texas Appleseed compared 320 premium quotes for male and female drivers of different marital statuses.  The research also examined whether pricing patterns changed based on geography, testing rates in eight different Texas cities: Amarillo, Arlington, Dallas, Houston, Laredo, Mission, San Antonio, and Tyler. Throughout the testing, other factors such as age of driver, address (within each city), type of car, and annual miles driven were held constant. The auto insurance tested was the minimum coverage required by state law. In all instances, the were based on drivers with perfect records, including no accidents, tickets, or claims.

Texas Cities Tested in the Study

Finding: Basic Auto Insurance Costs Female Drivers More

In the eight cities studied, Texas Appleseed found that women with perfect driving records pay a gender surcharge that averages 5% of the total annual premium, paying $56 more than men for the same basic coverage. Among the cities surveyed, Houston and Mission stand out as having the largest average rate difference between men and women. On average, women in Houston pay $75 more than men, and in Mission, women pay $66 per year more than men for the same coverage.

Looking at rates by company shows a similar trend.  Four out of the five insurance providers surveyed charge women more than men, on average. Farmers has the highest average gender surcharge, charging female drivers $144 more than equivalent male drivers. Farmers Insurance in Houston charges the highest penalty among the surveyed companies and locations, charging divorced women in Houston $224 more than similarly situated men.

Single females pay a steep gender surcharge as compared to single males. On average, single females pay $80 more than single males for the same basic auto insurance coverage. For Farmers Insurance, the surcharge for single women is even higher, with rates averaging $192 more annually compared to single men.

Progressive Insurance charges women who are single $115 more than single males. Other insurance companies, such as Allstate and Geico, also charge single females more than single males, but with a smaller rate difference. In contrast, State Farm maintains consistent rates across gender and marital status.

Finding: Divorce Alone Can Lead to Auto Insurance Rate Hikes

Individuals who get divorced see, on average, a $49 annual increase in car insurance. Consistent with other findings, there is an even harsher penalty for divorced women. In Houston, Dallas, and Arlington, divorced women pay $99 to $136 more on average per year for basic auto insurance compared to married women. In Tyler, Laredo, and Amarillo, divorced women pay between $51 and $61 more than married women. In contrast, divorced men in Tyler, Laredo and Amarillo pay $5 to $12 less per year for basic auto insurance compared to married men. Across the cities tested, divorced females pay $80 more on average for basic auto insurance compared to divorced males.

Finding: Widows Pay a Penalty

Four of the five companies surveyed charge different rates for married and widowed female drivers. Geico and Progressive charge female drivers whose spouse is deceased higher premiums than if their spouse were still alive — a widow penalty. In contrast, the testing found that married female drivers are likely see premiums from Allstate and Farmers drop after becoming a widow. The picture is different for widowed males, who, in four of the five companies surveyed, were charged the same as or less than their married counterparts.

Women also pay more, in three out of the five companies tested, when comparing the premiums of women who have lost a spouse versus men who have lost a spouse. Widowed females pay $59 more than male widowers, on average. Farmers Insurance and Progressive charge widowed women 12% to 13% more than male widowers, $192 and $115 more respectively.  Geico is the only insurance company that charges widowed females less than male widowers — 5% or $41 less on average.

Finding: Houston and Mission Lead Surveyed Cities in Gender-based Penalty

Among the cities in the study, Houston has the highest basic auto insurance premiums for all drivers, while the lowest premiums are in Amarillo. The Houston market also has the greatest average price hike for women — $75 — followed by $66 in Mission. Women in San Antonio and Laredo faced the smallest average auto insurance price hike based on their gender, roughly $50 annually.

Finding: Farmers Has Largest Gender-Based Pricing Difference; State Farm Has None

While each company tested, with the exception of State Farm, has noteworthy increases in the cost of auto insurance for female drivers, only Farmers averages more than $100 in added auto insurance cost for women. Farmers Insurance charges female drives on average $144 more per year compared to male drives, but the added charges can go up to $200 in cities such as Dallas, Houston, and Arlington. Progressive and Allstate also show gender disparities in auto insurance pricing. Progressive charges female drivers an average of $86 more per year compared to male drivers with equivalent characteristics. Allstate charges female drivers $30 more on average per year compared to male drivers.

Conclusion and Recommendations

Texas law requires drivers to carry basic automobile liability insurance to compensate for damages or injuries caused by a car accident. Millions of Texans purchase basic liability insurance to comply with the law. Because auto insurance is one of the few private market products that Texans are legally obligated to purchase if they own a vehicle, special protections exist in state law to protect against unfair pricing discrimination. The Texas Department of Insurance has a legal obligation to regulate, manage, and enforce equitable auto insurance pricing.

The gender and marital discrimination practices discussed in this report violate legal standards that protect Texans against pricing penalties with no actuarial basis. Further, these differences frustrate the basic public policy goal of ensuring that all good drivers have access to fair and reasonably priced auto insurance, so drivers can comply with the law and protect others on the road.

The Texas Department of Insurance should:

  • Investigate differences in basic auto insurance pricing based on gender and marital status;
  • Assess possible failings in its rate evaluation systems that allow disparate pricing that results in gender-driven differences and appears to violate state law; and
  • Block discriminatory rating practices.

The Texas Legislature should:

  • Demand that the Texas Department of Insurance (the Department) fulfill its legal responsibility to prohibit pricing discrimination against women, people who are divorced, and widows in Texas;
  • Require the Department to submit a report to the Texas Legislature assessing unfair pricing disparities based on gender and marital status and a timeline to implement specific steps to address the problem; and
  • Legislate protection for women against unfair auto insurance pricing, if the Department is unwilling to enforce existing laws.

Allowing auto insurance pricing discrimination to persist against women in Texas is a major shortfall of insurance oversight in Texas.  It hurts the bottom line of single women and single mothers, it penalizes women who decide to leave marriages — including abusive relationships — and, in some circumstances, creates a penalty for widows based solely on losing a husband. Texas regulators and leaders should not tolerate charging more for basic auto insurance simply because someone is a woman. The law prohibits such pricing discrimination and common sense demands that good drivers should be charged the same price regardless of their gender or marital status.  It is time for the Texas Department of Insurance and the Texas Legislature to uphold and enforce the law.

Appendix A

Detailed Structure of Auto Insurance Premium Testing

Testing Dates: May 14- June 25, 2018

Five insurance companies (Allstate, Farmers, Geico, Progressive, and State Farm) were tested in eight different markets/geographies in the state of Texas: Houston, 2,303,482; San Antonio, population 1,492,510; Dallas, population 1,317,929; Arlington, population 392,772;  Laredo, population 257,156; Amarillo, population 199,582;  Tyler, population 104,798; and Mission, populatio 83,563.

Parameters used in testing and held constant across all profiles tested:

– Age: 40 years

– Employment: Cashier with private employer

  • In current job for 5 years or more.

– Education Level: High school degree

– Type of Housing: Rental (Apartment)

  • Lived in same place for 2 years or more

– Previous insurance company: State Farm (When testing State Farm, used Allstate)

  • Previously insured for 3 years.
  • Current Bodily Injury policy amount: “30,000/60,000 – State Minimum”
  • Current insurance expired at the end of the current month

– Type of Car: 2007 Toyota Camry

  • Purchased: March 2007
  • Car owned in full: Yes
  • Commute: 10 miles, 5 days per week
  • Miles driven per year: 15,000-15,999

– Members of household: Single, driver lives alone; married, driver lives with spouse only

  • Other drivers of the vehicle: Single, No; Married, spouse is secondary driver
  • Uninsured drivers in household in last 12 months?: No

– Age when driver’s license was obtained: 16 years  

– No accidents and No tickets or other violations

– No security device in vehicle and No driver safety class

– Did not participate in “SNAPSHOT,” “DRIVE SAFE & SAVE,” or other programs.

Insurance policy features (Minimum liability coverage according to Texas Law):

– Bodily Injury: $30,000 per person/$60,000 per accident

– Property damage per accident: $25,000

– Personal injury protection: “DECLINE”

The ONLY factors that varied:

– Gender: Male, Female

– Marital Status: Single, Divorced, Widowed, and Married

Each of the eight geographies was tested with the five different auto insurance providers. Within each insurance provider, eight different combinations were tested: Male-Single, Male-Divorced, Male-Widowed, Male-Married, Female-Single, Female-Divorced, Female-Widowed, and Female–Married. This resulted in the compilation of 320 premium quotes.

Within each geography, an apartment address was chosen in a zip code that had a median family income between 75% and 100% of the 2016 median family income (MFI) for the city, with the goal of targeting moderate-income communities. The zip code information and addresses chosen for the study are detailed in the chart below.

Source:  American Community Survey 2012-2016 5-Year Estimate.
Source:  American Community Survey 2012-2016 5-Year Estimate.

Appendix B

Annual Auto Insurance Premium Data

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