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Investigating Discrimination in Car Insurance Premiums in California

Investigations by the Insurance Department in California

There are currently investigations by the Insurance Department in California against eight auto insurance companies suspected of discriminating racers for minority environments, as well as responses to findings by ProPublica and Customer Reports.

This is related to the existence of an article from ProPublica and Consumer Reports that found eight Californian insurance to use higher premiums in minority environments than non-minority environments at similar accident costs. While the law in California prohibits discriminatory treatment by using excessive insurance rates.

On 28 April ago deputy commissioner Ken Allen once wrote to a lawyer at the Consumers Union, “The allegations against this price is a serious offense” For that to be investigated and summarizing all the data and information needed to complete an analysis of eight companies on a file-per-file basis. The goal is whether there is true improper determination by the insurance company.

Of course the California insurance department debated the ProPublica analysis and said “The conclusions were taken incorrectly because of using the wrong methodology” as the regulatory body mentioned in an official statement.

Despite having made such statements the department decided to make an inquiry on its own, and would make a public review especially after receiving input from the Consumer Union, Customer Watchdog and also from Public Advocates.

Is there any data that they get, so what methodology they use in their review. However Allen wrote that he would ask the eight insurers to submit the “Methodology of judgment made so that discriminatory practices and automated plans”
The department will collect regularly and information obtained.

USAA, Liberty Mutual and Nationwide are the three major companies of the eight insurers under investigation.
After investigation Liberty Mutual and Nationwide refute and say they do not discriminate and they are ready to cooperate with California insurance department.

“We always provide competitive auto insurance option options, and support discriminatory free at work and business,” said Liberty Mutual spokesman John Cusolito

Nationwide spokeswoman Eric Hardgrove said “Nationwide uses tariffs based on good actuarial principles, and always uses rating and non-discriminatory factors in accordance with state rejuvenation legislation”
While USAA has not commented on the existence of the case.

James Lynch, the main actuary of the Insurance Information Institute said “We hope that the California Department of Insurance re-clarifies what it means” The wrong methodology leads to a false conclusion “”

Data from ProPubica have been researched, it is said by Lynch and hire an actuarial company, their findings have not been published.

Eight of the 21 companies have a price difference of more than ten percent led by Liberty Mutual. This is for the California area which is a highly regulated insurance market. Premiums are charged 33 percent higher than zip codes and this applies to most minority residents for similar accidents, while for USAA and Nationwide at 18 percent and 14 percent.
In other states there are also different prices but less regulated insurance.

While in Illinois, 33 out of 34 companies on average got a safe driver, it is analyzed at least ten percent. It is contained in zip code with ZIP code which mostly has other risky ZIP codes. For in Missouri and Texas half of the insurance companies charge higher premiums for high-risk minority communities than non-minority communities who are also at high risk.

We can check insurance payments in only four states because they are the only type of release data needed to compare insurance payments with geography.

This insurance payment can be seen in four states as they have the required release data type and compare it with insurance payments with the geographic system.

Six of the Democratic Congress members also fined the Treasury Department to appoint directors to the Federal Insurance Office to monitor insurance policies in minority environments. This is done by Illinois lawmakers to restrict car insurance there.

“We ourselves do not know exactly what information is needed, like everything is in the black box,” said Richard Marcantonio, a General Advocate in San Francisco who also said the California regulator did not go far enough.

Investigations conducted by departments should be done in public, and the data and analysis should be presented to the public as well. “It is very important if there is a public who sees the conclusion without foundation and must understand what goes into them” said Marcantonio

This investigation was just the beginning, Allen said to convince the Consumer Union. “Handling on ZIP code, the Department will always focus and in all the archives and subsequent plans for any insurance company” he said