U.S. Rep. Rashida Tlaib (D-Detroit) and two of her colleagues announced on Wednesday that they will introduce a measure called the Preventing Auto Insurance Discrimination Study Act, or PAID Study Act.
The legislation would require the U.S. Government Accountability Office to conduct a study on automobile insurance companies’ use of “socioeconomic, non-driving factors in premium setting and underwriting decisions.”
U.S. Reps. Bonnie Watson Coleman (D-N.J.) and Mark Takano (D-Calif.) have joined Tlaib as co-sponsors. The bill will be officially introduced Friday, according to a press release.
“Auto insurance is rife with systemic racism. According to research conducted by the Consumer Federation of America (CFA) over the last seven years, state-mandated auto insurance coverage is disproportionately more expensive for Black drivers than white drivers,” the press release reads. “Worse, such pricing disparities between Black and white drivers are driven in part by the use of socio-economic, non-driving factors in premium setting that serve as a proxy for race instead of reflecting a person’s driving history, including education, occupation, employment status, credit scores, previous insurer information, zip codes, census tracts, homeownership status, and more.”
This auto insurance discrimination on non-driving factors has allowed auto insurers to get benefits off the financial struggles of many Americans, Tlaib said.
“Now, we have a pandemic exponentially exacerbating those financial struggles, with folks being forced to choose between paying for state-mandated auto insurance, keeping a roof over their heads, or food on the table through no fault of their own,” she said. “I thank Reps. Watson Coleman and Takano for co-leading this effort to have the real world impact of auto insurance discrimination finally studied—and demonstrated—so that we can finally get our residents the relief from this discrimination they deserve.”
The PAID Act has previously been introduced by Tlaib — whose congressional district suffers some of the highest auto insurance rates in the U.S. — and Watson Coleman to ensure that insurance companies use only driving records to determine car insurance rates and eligibility.
“We have to start to acknowledge that we’ve allowed systems in this country to decimate the earnings and lives of those least able to afford it or speak out for themselves. Car insurance practices are part of the problem – it’s an absolutely necessity for most American families, and many of them are being charged higher rates for unfair, undisclosed, and unproven reasons,” Watson Coleman said.
Minority neighborhoods pay higher car insurance premiums than predominantly white neighborhoods, which “once again highlights the systematic racism that is so deeply rooted in our country,” Takano said.
“My colleagues and I have come together to demand that the Government Accountability Office conduct studies of automobile insurance coverage so we can begin to address the problem at hand. If we want to create a more just, more equal country, we must not tolerate discrimination of any kind,” he said.
The PAID Study Act has the support of CFA and CURE Auto Insurance, which have both been active in addressing the issue of auto insurance discrimination.
“The insurance industry and most state regulators have been unwilling to confront the fact that auto insurance pricing in America is both impacted by and contributes to structural racism,” CFA insurance expert Douglas Heller said. “Because of this, even with perfect driving records, the poor pay more and Black and Brown drivers pay more for mandatory auto insurance coverage. If lawmakers and regulators think additional data and evidence are needed to move this industry toward fairness, then we should begin that effort now.”