Insurance companies have typically defended themselves against widespread accusations they get around law prohibiting the charging of people of color more than whites to insure their automobiles by claiming that the risk of accidents is much higher in minority neighborhoods. That excuse is now shown to be bunk.
A ProPublica investigative team comprising Julia Angwin, Jeff Larson, Lauren Kirchner, and Surya Mattu has concluded despite the companies’ claims, people living in minority neighborhoods on average do pay more for their car insurance those who live in white neighborhoods that have the same risk. And in some cases, at least, they pay more for less insurance policies than what’s paid by residents of white neighborhoods with higher risk. Check out the Chicago-area disparities here.
The Insurance Information Institute disputes ProPublica’s findings, arguing that the industry cannot be discriminatory because it doesn’t keep information on its customers’ race or ethnicity. This is a well-worn deflection:
In some cases, insurers such as Allstate, Geico and Liberty Mutual were charging premiums that were on average 30 percent higher in zip codes where most residents are minorities than in whiter neighborhoods with similar accident costs.
Our findings document what consumer advocates have long suspected: Despite laws in almost every state banning discriminatory rate-setting, some minority neighborhoods pay higher auto insurance premiums than do white areas with similar payouts on claims. This disparity may amount to a subtler form of redlining, a term that traditionally refers to denial of services or products to minority areas. And, since minorities tend to lag behind whites in income, they may be hard-pressed to afford the higher payments. [...]
Rachel Goodman, staff attorney in the American Civil Liberties Union’s racial justice program, said ProPublica’s findings were distressingly familiar. “These results fit within a pattern that we see all too often — racial disparities allegedly result from differences in risk, but that justification falls apart when we drill down into the data,” she said.
A pattern seen all too often, indeed.
In other words, this isn’t accidental. The companies know full well what they’re doing. What’s it take to get them to stop?