Washington State Attorney General Investigating Possible Racial Discrimination Due to Auto Insurers’ Use of Credit Scores
Washington, D.C. — Washington State Attorney General Bob Ferguson announced Tuesday that his office is investigating the use of credit history in auto insurance pricing after a Thurston County Superior Court judge rejected an attempt by auto insurers Progressive and PEMCO to block the Department’s review of potential racial discrimination against Washington drivers. The investigation had not been publicly announced prior to the two insurers’ legal efforts being rejected.
“When auto insurers price drivers based on their credit history, people of color tend to pay more because of systemic bias and discrimination in our nation,” said Douglas Heller, CFA’s Director of Insurance. “The Attorney General’s investigation of racial discrimination in this market is especially important because Washington law requires all drivers to buy car insurance. Our research found that consumers with poor credit pay 79% more on average than excellent credit customers, even if the lower-credit driver has a perfect driving record. Some insurance companies charge credit-based penalties on the order of 185% surcharge on safe drivers.
“The attempt by at least two insurers to stop Attorney General Ferguson from investigating the relationship between the use of credit and drivers’ race or ethnicity suggests that these companies are concerned about what will be uncovered. Of course, the Attorney General should be allowed to investigate business practices that appear to disproportionately harm consumers based on their race or ethnicity, and he should bring legal action against any company violating Washington law. The use of credit scoring, which impacts not only insurance pricing but also marketing and claims handling, has been a tool of unfair discrimination in the insurance market for many years, and we look forward to the findings from the Attorney General’s investigation.”
Our Subject Matter Experts
Related Articles
Redlined
The Persistence of Racial Inequality in the Cost of Homeowners Insurance
Black and Hispanic Homeowners Pay Hundreds of Dollars More Annually for Homeowners Insurance
“Racial Premium Gap” Adds Up to $15,000 in Additional Insurance Costs for Black Consumers and $28,500 for Hispanic Consumers Over a 30-Year Mortgage
CFA Letter of Support for AB 2038 to the California Legislature