Shopper Studies: Shopper and Civil Rights Teams Urge Colorado Legislators to Handle Systemic Racism in Insurance coverage

WASHINGTON, May 4 (TNSPol) – Consumer Reports issued the following press release on May 3, 2021:

The Consumer Federation of America (CFA), the Center for Economic Justice (CEJ) and Consumer Reports (CR) urge Colorado lawmakers to enact proposed Laws SB 21-169 (Sen. Buckner) that would prevent that insurance companies use data and data algorithms that lead to unfair discrimination against consumers based on their race, gender or other protected class. The proposal addresses the impact of systemic racism on the insurance market and will both expand access to coverage and make all aspects of insurance transactions fairer.

“Colorado has an opportunity not only to stop the use of harmful factors in auto insurance pricing, but also to remove systemic biases from the field,” said J. Robert Hunter, CFA insurance director and former Texas Insurance Commissioner. “This is a strong consumer protection measure that will identify and eradicate the systemic biases that infect the insurance market.”

SB 21-169, sponsored by Senator Janet Buckner, would require insurers to eliminate practices that directly or indirectly treat customers differently based on race, color, national or ethnic origin, religion, gender, sexual orientation or transgender. It also prohibits insurers from using external consumer data and sources of information, predictive models or algorithms that unfairly discriminate against consumers based on these characteristics. While the bill bans direct or proxy discrimination, it gives insurers an opportunity to demonstrate that their use of data, algorithms or models does not lead to unfair discrimination.

“In the aftermath of George Floyd’s murder, many insurance company CEOs have expressed their commitment – and their companies’ commitment – to eradicating systemic racism in America,” said Birny Birnbaum, director of the Center for Economic Justice. “This bill calls on insurers to do their part and test their practices for racial prejudice. Today we shall see if these CEOs of the insurers meant what they said.”

The groups noted that auto insurers use numerous socio-economic characteristics such as creditworthiness, zip code, gender, education, occupation, home ownership status, and marital status to calculate premiums as examples of factors that would need to be reviewed under the new law. Using data collected from Quadrant Information Systems, LLC, CFA with auto insurance premiums for each Colorado ZIP Code, we highlighted the following key findings that illustrate the importance of the legislation:

Coloradans with clean driving records pay an average of 33% more for coverage if they have a FAIR credit score instead of an EXCELLENT credit score when everyone else is equal.

Drivers with poor credit scores will be charged 72% more than EXCELLENT credit drivers for the same coverage. For minimum liability insurance, that translates to an average annual credit penalty of $ 427 for drivers with perfect records.

WOMEN 35 year olds have, on average, 3% higher rewards than MEN’S in Colorado, even if they have the same driving history.

(All data provided is from the profile of a driver who is 35 years old and unmarried, has a perfect driving shot, rents his house and has a high school diploma, drives a 2011 Honda Civic LX, commutes 12 miles and does this commute 5 days a week )

Consumer Reports magazine also recently reported on the impact of insurance companies’ use of the occupation and level of education of insurance companies and how their use of these factors disproportionately harms people of color.

“It has been a long time since we stopped this harmful tendency and systemic racism in the auto insurance markets,” said Chuck Bell, program director for consumer reports. “Price insurance based on non-driving factors such as creditworthiness, occupation, and education means that many black and Latin American drivers end up paying more for coverage. By banning the use of information, models, or algorithms that unfairly discriminate, will SB 21-169 do this. ” Making auto insurance in Colorado more equitable and affordable. “