Congressman’s Bill Would Force Trump Administration to Fulfill Pledge to Study Racial Disparities in Auto Insurance Pricing

Rep. Mark Takano, D-Calif., cited our report that minority neighborhoods pay higher car insurance premiums than white areas with the same risk.

by Julia Angwin

This story was co-published with Consumer Reports.

Rep. Mark Takano, D-Calif., introduced legislation last week requiring federal authorities to examine racial disparities in auto insurance premiums, citing a story co-published by ProPublica and Consumer Reports last April.

The legislation, which has six Democratic co-sponsors, is in part a rebuke to the Trump administration for seeking to shift the mission of the Treasury Department’s Federal Insurance Office from being a watchdog agency tasked with studying auto insurance pricing into an industry booster. 

The bill calls for the office to collect ZIP-code level claims data from insurers across the nation, and use the information to study whether higher prices in minority neighborhoods are justified by the risk of bigger payouts in those areas.

“The lack of transparency in the auto insurance market makes it impossible to understand and address potential racial disparities,” Takano said in a press release announcing the bill. “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.”

The insurance industry responded that there is no need for a federal study. “This [legislation] is a solution in search of a problem,” said David Snyder, a vice president at the Property Casualty Insurers Association of America. “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.”

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Source: ProPublica