LAWYERS CALL DISCRIMINATORY AUTOMOTIVE INSURANCE STANDARDS

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By the time Cuqui Rivera had to renew his auto insurance policy in December 2019the longtime activist had only heard of some of the reasons why she — a Hispanic woman with a high school diploma — might pay more than her white college-educated neighbors.

So Rivera decided, “Let me be your guinea pig,” she said. “Let’s see if it’s true.

She checked the website of Liberty Mutual, the company she had worked with for at least two decades, to see if it discussed education, work history and credit rating in insurance rates. She said she couldn’t find anything.

His annual policy with Liberty Mutual costs $2,997, Rivera said. She went to CURE, the West Windsor-based insurance company, and said she had found the same policy for $1,188a saving of 60%.

That’s because CURE is the only insurance company that doesn’t consider education, employment and credit score when determining a driver’s rate, according to advocacy group New Jersey. Citizen Action.

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The result of using these “indirect revenues” in rate setting is racial and class disparity that Rivera and other advocates say amounts to widespread discrimination in New Jersey — disparities that the insurance industry does not deny but insists are incidental to societal realities beyond its control.

Advocates have pressed lawmakers, as they have for more than a decade, to change the law so companies can no longer use these and other factors, such as marital status and whether a driver owns a home. , to determine insurance rates.

But their mission did not succeed. A bill that would exclude these factors from the setting of insurance rates narrowly allowed Senate but was not displayed in the Assembly on the last day of the legislative session last week, meaning he has to start the process all over again.

That means drivers in predominantly black neighborhoods in cities like Patersonheavily Latino areas like Camden and low-income towns like Lakewood will likely continue to pay higher car insurance rates than people who live nearby in higher-income, predominantly white communities, such as Ridgewood, cherry hill and Brick.

According to Consumers Federation of America. Drivers in predominantly low-income postcodes pay nearly 52% higher premiums on average than those in high-income areas, the federation said.

“There is a disproportionate punishment imposed on African Americans and Latinos,” said Douglas Hellerinsurance expert with the consumer federation.

“Every day that delays” the passage of insurance legislation, he says, “New Jersey residents with excellent driving records pay too much for insurance because policymakers are afraid to stare at insurance companies.”

Representatives of insurance lobby groups New Jersey did not respond to interview requests, but in their testimony on the bill last year, they denied any discrimination in rate setting.

Rates vary by breed throughout NJ

Fares can range from hundreds of dollars in a small area. Take a 4 mile stretch of mostly white towns in the prairiesfor example.

According to the data, the average annual rate in Carlstadt is $1,822. It is $1,707 next in Rutherford. And in the neighboring town, Lyndhursthis $1,688.

But racial disparities are clear across New Jerseyaccording to a United States TODAY Network analysis of the data, which was collected in 2020 by insurance data company Quadrant Information Services and provided by the federation.

All but one of the top 25 postcodes with the lowest average annual insurance premiums – approximately $1,071 — were mostly white, affluent suburbs concentrated in Hunterdon, Morris and Somerset counties, according to the analysis. The one zip code that was majority black represented a population of 258 people in a half square mile at Township of Bernardsa County of Somerset 68% white city, according to we census data.

The 25 postal codes with the highest average premiums — approximately $2,250 — were in predominantly black, low-income cities North Jerseyincluding Elizabeth, Fairview, Irvington, newark, North of Bergen, Passaic and Paterson.

Rivera, a high school graduate who said she has a clean driving record and excellent credit, is half Puerto Rican and lives in North Brunswick. The average annual rate is $1,632according to the data.

North Brunswick is a diverse community — 35% white; 25% Asian; 20% black; 19% Hispanic – and its median household income of $96,546 is 20% above the state median $85,751according to Census reporteran independent site that centralizes and analyzes we census data.

But if Rivera lived 6 miles west of Franklin Townshipin County of Somerset, she could pay less for car insurance. The average was there $1,537almost $100 cheaper than in North Brunswickaccording to data from the consumer federation.

Rivera has an additional downside though: she’s a woman. Women paid on average close to $100 more per year for car insurance than men, according to data analysis.

“I’m a victim of discrimination,” said Rivera, who works with several advocacy groups and is head of the Puerto Rican Action Council and project coordinator at the Latino Action Network, both in New Brunswick.

Broader factors, such as population and density, also drive up premiums in densely populated areas. North Jersey cities where residents pay the most for car insurance. But individual factors like education and credit score mean two people living in the same city with similar driving histories can pay different rates.

Take Jonathan Forge. The 32 year old player Port Authority security guard, who emigrated from Haiti four years ago said he had zero points on his driver’s license and had taken defensive driving lessons to save money on car insurance.

Yet the $3,500 per year that he pays for two cars is higher than the average paid by men in his age group in Montclair, Where he lives. The average annual rate in the predominantly white upscale suburb of Essex County is $1,425 for a 35-year-old single man, according to federation data. That’s much lower for that same demographic with a great driving record: $842.

“We’re trying to do everything we can to reduce that, and to uncover all of this information, it’s, like, wow. Things are already stacked against us,” Forges said.

Insurance formulas deemed “valid”

The insurance industry, which lobbied hard against the bill, insists that rate-setting is a sophisticated, scientific discipline blessed by the state watchdog, the Directorate of Banks and Insurance.

This agency said in a 2008 report that insurance companies use more than a dozen factors to determine insurance rates, but data on race and income is not collected by insurers.

The use of education and occupation data, the agency said, was “actuarially sound.” Citing loss data from insurer GEICO, the department said drivers with bachelor’s and master’s degrees were “less risky” than the general population. Black and Latino drivers were less likely to hold college degrees and “professional” jobs, according to the report, but it noted that “these groups are not isolated.”

The department also said car crashes were more common in urban centers, which have higher-than-average racial minority populations and low-income residents who typically don’t hold college degrees or professional jobs.

And credit-based insurance scores — different from typical credit scores — are predictive of claims and likely “to make the price of insurance better match the risk of loss posed by the consumer,” according to one. study carried out in 2007 by the Federal Trade Commission.

The commission acknowledged that blacks and Hispanics are “significantly overrepresented among the lowest-scoring consumers,” and that likely has an effect on what those groups pay on average for insurance. But, like the state insurance agency, the Commerce Commission said using credit scores had “little effect” as a “proxy” for racing insurance rates.

And credit scores are used along with many other components to determine rates, said Christopher Starkwho was a frame with the National Association of Mutual Insurance Companies when he testified against the bill in 2020.

“It’s not like they just stop looking at the rest of the factors. It’s in the best interest of the insurer – we take it as our responsibility – to make sure we match the risk to the rate for the automotive public because that’s what’s right for everyone,” Stark said.

E-mail: [email protected]

Twitter: @dracioppi

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