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Nonprofit group highlights auto insurers’ unfair rate-setting practices, P.2

Previously, we began looking at a recent analysis by the nonprofit ProPublica which found significant disparities in premiums charged to drivers in minority zip codes as compared to those living in predominantly white neighborhoods. As we noted, the insurance industry disputes that auto insurance premiums are based on race or ethnicity, but the data isn’t clearly in their favor.

The Insurance Information Institute and the California Department of Insurance, to take two examples, have been critical of the ProPublica analysis, both as to its conclusions and its methodology. One of the criticisms is that an insurance company’s losses in any given zip code can vary significantly from the industry average, so it isn’t the case that an insurance company is necessarily being unfair in charging higher than average premiums in those zip codes. 

ProPublica certainly isn’t the only group to bring attention to discrimination in auto insurance rate setting. The Group Consumers Union has also spoken about discrimination in setting auto insurance rates. As that group has argued, setting insurance rates by zip code violates Proposition 103, which requires insurance companies to give most weight to driving safety records in setting insurance premiums.

Arguably, more needs to be done to prevent discriminatory auto insurance rate setting, but regardless of what consumers pay for insurance, they should expect their insurance carriers to have their back when they file a valid claim. When an insurance company refuses to honor its contractual obligations, it is critical for the insured party to work with an experienced attorney to ensure their rights receive zealously advocacy. 

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