Litigating Sex-Based Discrimination in Insurance: Montana on the Front Line

Rylee Sommers-Flanagan - Founder and Executive Director, and Benji Glanz - Impact Associate, Upper Seven Law

In 1983, Montana became the first state to bar insurance companies from using gender to decide how much to charge their customers. This sex-blind, or “unisex,” insurance law was a triumph for women’s advocacy groups, who hoped Montana would serve as an example for states around the country.

But in the decades since, only six states followed suit, and no law has been as wide-reaching as Montana’s. In other states, laws that ban using gender to set insurance rates are limited to the auto insurance industry. And in 2021, the Montana Legislature passed House Bill 379 (“HB 379”), undoing the state’s unisex law and instead proclaiming that “it is not a violation of the prohibition against sex or marital status discrimination in this section for a person to use . . . sex or marital status in establishing insurance premium rates.” Insurance companies in the state are now free to consider sex in ratemaking decisions again. It was business-as-usual legislation, once again offering the insurance industry increasing power over consumers.  

How We Got Here

In 1977, Congresswoman Yvonne Brathwaite Burke pointed to the insurance industry as “a bastion of sex-based practices, which are deleterious to women” (Caley Horan, Chapter 6, in Insurance Era: Risk, Governance, and the Privatization of Security in Postwar America 167, 2021). Advocates in the feminist movement began studying insurance data to show that actuarial risk could not justify the industry’s disparate treatment of women. At both the state and federal levels, women and feminist organizations began pushing for unisex insurance legislation. In the early 1980s—perhaps the peak of the insurance reform movement—most observers expected these laws to pass handily.  Horan, Insurance Era, Chapter 6.

In 1977, Congresswoman Yvonne Brathwaite Burke pointed to the insurance industry as “a bastion of sex-based practices, which are deleterious to women.”

The insurance industry, however, had other plans. Arguing that unisex laws would force women to pay more for insurance and—counterintuitively—bankrupt firms, companies like Geico, Nationwide, Cigna, Aetna, and Travelers sent hundreds of thousands of mailings to their customers, warning of dire consequences associated with unisex insurance. The American Council of Life Insurers (ACLI) spent $400,000 on anti-unisex ads, including in twelve of the country’s largest newspapers. and Industry associations lobbied against the laws in Congress. The National Organization for Women and the Women's Equity Action League worked to refute the industry’s self-serving public relations campaign, but by 1984, insurance companies had turned the tide of public opinion. State and federal unisex proposals stalled out. Lawsuits against insurance companies failed as well. Insurance reform, which had looked inevitable at the beginning of the decade, was roundly defeated (Horan, Insurance Era, Chapter 6).

Montana’s Unisex Trajectory

Montana—an anti-corporate stronghold—was the only state to overcome the anti-unisex campaign, banning the consideration of gender and marital status in all forms of insurance in 1983. At the time, the National Organization for Women estimated the law would save women $8,000 over a lifetime; the industry estimated a cost of $16,000.

Montana’s unisex law remained in place for 36 years and none of the insurance industry’s dire forecasts came to fruition. Nevertheless, a Republican majority re-legalized insurance discrimination based on sex and marital status in 2021. Industry insiders lobbied hard for this change, repeating the same tired arguments from the 1980s: that unisex laws hurt women and hurt business.  However, studies by the Consumer Federation of America show that without unisex laws, women often pay more than men for insurance—even in auto insurance, where actuarial assessments tend to show that men are riskier. As CFA explained in its rebuttals to the industry’s claims, sex discrimination in insurance only serves to allow insurers to raise rates.

The Case

In 2021, Upper Seven Law challenged the constitutionality of Montana’s unisex insurance rollback. Armed with data and the strength of the Montana Constitution’s equal protection clause, we filed a lawsuit on behalf of a team of individual consumers and women’s advocacy organizations, including the Montana chapters of the American Association of University Women and the National Organization for Women. The case seeks to invalidate the new law for codifying discrimination against women and unmarried people. Trial is scheduled for the spring of 2025.

Women between the ages of 40 and 60 pay more. Table courtesy of Consumer Federation of America.

HB 379 constitutes state-sanctioned discrimination—and it gives a unique illegal benefit to the insurance industry. No reliable correlation between sex and insurable risk exists, making considerations of sex and marital status simply one more tool insurance companies can use to increase profits. The results are at best arbitrary and at worst wholly discriminatory.

Because insurance companies have been allowed to discriminate with impunity in most places, the impact of sex -and marital status-based discrimination is relatively unstudied. Nevertheless, available evidence shows real harm. Even preliminary observations from the Consumer Federation of America (“CFA”) in 2022 showed that some auto insurers in Montana immediately began increasing rates on women. CFA tested four major insurers—who account for roughly 40% of the auto insurance market in Montana—and found that Farmers and Progressive had begun charging women between 8% and 17% more than men, while Liberty Mutual began charging men 22% more, and GEICO had yet to make changes to premiums that distinguished between men and women. Past studies are consistent with these results—in 2017, CFA compared men and women with identical driving records and found that women between ages 40 and 60 were paying an average of $100 more per year on car insurance.

With more time and more information across industries, the data is likely to reveal even more extreme disparities. No other industry is permitted to discriminate on the basis of sex or marital status. It’s time to hold the insurance industry accountable.