ProPublica Study Shows Insurance Companies Discriminate When Assigning Rates

When it comes to auto insurance, your provider looks at a range of factors to determine the appropriate rate. Recently, this combination has been called discriminatory, but the industry denies this allegation. In response, ProPublica examined public and private data concerning risks and rates to form their own conclusion. ProPublica also looked at the algorithms used in California, Illinois, Missouri and Texas to determine auto insurance rates.
ProPublica’s team looked at aggregate risk data by zip code from the insurance commissioners of the states previously listed. Then, they compared requests for liability premiums from the largest carriers in each market for a theoretical driver: a 30-year-old female teacher with a bachelor’s degree, good credit and no traffic violations. This safe driver has a 2016 Toyota Camry, which she uses for a 15-mile commute and only puts on 13,000 miles a year. In her first request, she’s looking to purchase a policy with $100,000 of property coverage, $100,000 for medical bills and up to $300,000 per accident.
With all of this data, ProPublica compared the premiums charged by each insurer with the average risk of liability payouts per zip code. To determine which zip codes had a higher percentage of low-income and minority drivers, researchers found 145 underserved zip codes with a minority population of 50 percent or higher, a household income below average and a higher percentage of uninsured motorists.
After looking at both figures for a range of zip codes, researchers found:

  • Some insurers charge significantly higher premiums for the drivers in majority-minority zip codes than for residents in non-minority zip codes. Illinois had the greatest difference.
  • On average, the difference amounts to 10 percent. However, some companies charge more. For instance, Allstate, Travelers, Metropolitan, Pekin and Auto Owners increased premiums 30 percent on average in riskier zip codes.
  • These trends appeared nearly uniform across all states studied.

Do you think you’re being overcharged for your auto premiums, despite being a safe driver? Speak with an agent at Ion Insurance to explore affordable options. To begin, give us a call at 203.729.5261.