Degrees cut cost of car cover

A PERSON with a perfect driving record who left school early can be slugged as much as 14 per cent more for car insurance than a university-educated policyholder.

The nation’s top consumer group is now questioning whether price-setting based on education is discriminatory.

Secret shopping by News Corp Australia reveals an SUV owned by a driver with a clean record costs less than $700 to insure comprehensively with Progressive Direct if they hold a tertiary degree but nearly $800 if they quit school before finishing Year 10.

A person who finished high school but didn’t go to university would be up for $764.

If you’ve never noticed such a question on an insurer’s online quoting engine it’s because it’s usually not there – hardly any providers have the gall to ask when you left school, instead preferring to rate drivers on their actual driving history and where the car is kept.

But Progressive Direct takes a different view, saying the extra inquiries it makes helps its develop a more accurate picture and offer lowerrisk drivers a better deal than major insurers.

The nation’s leading consumer group, Choice, said what Progressive was doing was potentially discriminatory.

“The question here is whether or not the insurer has the data and evidence to support its decision to slug early school leavers with a price premium,” said Choice policy adviser Xavier O’Halloran.

“We call on Progressive to publicly show proof that people without university degrees are higher risk drivers. If they can’t produce the evidence, the practice is potentially discriminatory,” Mr O’Halloran said.

“We’d also call on them to be transparent on what makes up premium prices.”

Progressive managing director Simon Lindsay said it would provide the proof – but only if the regulator ASIC asked for it.

“Yes, it is unfair when you think about it individually,” Mr Lindsay said.

“I think insurance companies get it wrong, but you are forced to go with averages.”

And on average, “the data does play out” that people who leave school early have higher claims costs, he said.

The Australian Securities and Investments Commission (ASIC) would not comment.

No brand run by either of the largest insurers, IAG or Suncorp, uses education as a “rating factor”.

Progressive’s Mr Lindsay revealed a renter pays more than a homeowner when everything else is equal.

Insurance company Youi uses occupation to help set premiums. But it does not use education to calculate prices.