Industry fights back against campaign for 'unisex' insurance rates

* A male driver under age 25 falls into a statistical high-risk category, so he pays more for insurance coverage than a young woman of the same age.

* A man and a woman who work in similar jobs, at the same salaries for an equal amount of time, accumulate the same amount of money in their pension funds. But on retirement the woman collects smaller benefit payments each month than the similarly situated man because statistics show that women are expected to live longer and thus collect pension payments longer.

Sex discrimination in the insurance business has put consumer and civil rights concerns at odds. Such situations should be evened out in the interest of civil rights, many feminists say. The insurance industry says that the very basis of the business is to calculate risk based on the differences between groups - a policy that helps hold rates down.

No one likes to be reduced to a statistic or a stereotype. But there may be some benefits, as well as drawbacks, to consumers in being pigeonholed and categorized.

Trade association officials say the insurance industry is facing one of the biggest challenges ever to its actuarial foundations with this effort to superimpose social policy on business decisions. Further, they say, across-the-board unisex rate-setting would constitute a major overhaul of the industry that could cost consumers millions of dollars in higher insurance costs.

The movement to mandate unisex rate setting in auto, health, disability, life , and pension and annuity plans has gained some convincing victories. Montana, no bastion of feminist ideology, this spring became the first state to bar sex discrimination in rate setting. Hawaii, Massachusetts, Michigan, and North Carolina already prohibit gender from being used to set auto insurance rates. Broader applications proposed this year, like those in Montana that go into effect in 1985, have been beaten back by the industry in these states and half a dozen others. And later this month the Supreme Court is expected to rule on an appeal of a case in which an Arizona state employee successfully challenged a pension plan option that would have paid her less than a male counterpart.

Federal unisex rate-setting bills in Congress have enough momentum that one major life insurance trade group's leadership threw its support behind the legislation in hope of gaining concessions. But a precedent-setting membership uprising reined the group back to hard-line opposition.

The National Organization of Women (NOW), which staged demonstrations over the issue in 25 cities last week, contends that the industry's statistics don't provide a fair basis for rate setting.

''Insurance can be and should be based on factors that can be modified: smoking and drinking habits; weight; driving practices; life style,'' says Judy Goldsmith, national president of NOW. ''It should not penalize people for something over which they have no control. Although there are measurable actuarial differences on the basis of race and religion, the industry does not discriminate in those areas. . . . Sex should be treated in exactly the same way.''

The actuarial data provide both sides with plenty of ammunition. Apparently using the same statistics, two interpretations emerge: NOW says the average woman spends in her lifetime about $16,000 more than the average man for auto, life, disability, pensions, and annuities; insurance groups say the average woman pays $8,000 less.

The American Academy of Actuaries (AAA), a trade group for those who calculate insurance risks, concluded in a study on the economic impact of unisex ratings that women as a group would pay over $1 billion more annually for all types of insurance than they do now and men would pay $515 million less. Low-risk individuals would have to subsidize the costs normally charged to high risks, the group suggests.

The industry's most heated objections are over the impact of retroactive implementation on retirement plans. The federal bills require insurers to equalize pension and annuity contracts at the highest benefit level of each class - not just for those still paying into programs, but on existing plans that are already paying out to retirees.

''By doing this you have to provide insurance you didn't collect premiums to provide,'' says Stephen Kellison, executive director of the AAA. In public retirement systems, the extra costs could amount to billions of dollars that would have to come from state funds, he says, and insurance companies would have to make up for it in individual programs with higher rates in newer contracts.

Results of unisex auto insurance pricing in other states are mixed. But the industry points to an automatic increase in young women's rates. And, says George Bernstein, an attorney for several major insurers, if insurance companies can't charge the high risks more money, then market forces will cause insurers to avoid the high risks and accept only the lower risks.

In states like Massachussetts, there was an increase in the number of uninsurable drivers with the passage of the unisex law. But, notes an Insurance Services Office official, unisex laws in that state were passed simultaneously with age and geographic distinctions that would affect the results, too.

NOW's Ms. Goldsmith concludes that sex-based actuarial data is used to justify profits.

But insurance companies are in business to make a profit, says Andrew Tobias, author of ''The Invisible Bankers,'' a book critical of the insurance business. He says the business is competitive enough that if unisex pricing was workable, it would likely spur an upstart company to offer competitive unisex rates.

Estimated impact of unisex rates on premiums (Percentage change) Male Male Male Female Female Female Type of insurance Age 20 Age 40 Age 65 Age 20 Age 40 Age 65 Life insurance -2% -3% N/A +6% +11% N/A Health insurance: Medical expense +56% +13% 0 +14% -6% 0 Disability +24% +2% 0 -6% -21% 0 Auto insurance -20% 0 0 +37% 0 0 Individual annuities +6% +6% +6% -6% -6% -6% Source: American Academy of Actuaries