California Democrat and U.S. Representative Mark Takano wants the issue of insurance rates moved to the federal level. He has introduced a bill in the House — and he has six Democrat co-sponsors — requiring the Federal Insurance Office (FIO) to study racial disparity in car insurance premiums.
The bill came about — Takano said — when he read an article published by Consumer Reports and ProPublican in April of last year. He wants the FIO to look at zip code level claims around the country made to insurers. The point is to see if the higher prices in minority neighborhoods are justified by higher risk payouts in those areas.
“This legislation is an important step to determining whether minority drivers are being unjustly overcharged for insurance premiums because of reasons unrelated to risk. Given that auto insurance is a requirement for drivers, and that driving is a necessity for many Americans, there is a strong public interest in studying and addressing discrimination in the auto insurance market,” Takano said.
David Snyder of the Property Casualty Insurers Association of America (PCI) pooh-poohs the notion that such a study is needed at the federal level.
“This is a solution in search of a problem. There is no need for this duplicative and costly layer of federal involvement. For more than 150 years, the states have been effective in regulating insurers to protect consumers, foster competitive insurance markets, and prevent unfair discrimination,” Snyder said.
Not so says Takano who contends the two publications found some of the nation’s biggest insurers are charging people in minority neighborhoods auto insurance rates that are 30% higher than drivers in other areas and to drivers that have similar accident statistics and costs.
He also points out in his heavily regulated California Nationwide, USAA and Liberty Mutual are charging higher rates in some areas that are 10% more than they charge people in zip codes with similar risk but that are predominantly white neighborhoods.
In response Consumer Reports noted its study is limited.
“Our analysis was limited to the four states — California, Illinois, Texas, and Missouri — that collect the information necessary to do such comparisons. The other states said they didn’t have the necessary data. If Takano’s bill is enacted, it would require a report on racial disparities in car insurance pricing in all states to be completed within two years,” the magazine said.
It also noted that because of its original California required Nationwide and USAA to adjust their auto insurance rates.
Civil rights groups like Takano’s proposed bill. Sam Brooke of the Southern Poverty Law Center said, “We see time and again, people — especially in communities of color — have trouble finding and keeping mandatory insurance because it is so expensive. This creates a vicious cycle where, because they cannot afford it, they get additional tickets with mounting fees.”
Source link: Consumer Reports