By the time
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
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.
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
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
That means drivers in predominantly black neighborhoods in cities like
“There is a disproportionate punishment imposed on African Americans and Latinos,” said
“Every day that delays” the passage of insurance legislation, he says, “
Representatives of insurance lobby groups
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
According to the data, the average annual rate in
But racial disparities are clear across
All but one of the top 25 postcodes with the lowest average annual insurance premiums – approximately
The 25 postal codes with the highest average premiums — approximately
Rivera, a high school graduate who said she has a clean driving record and excellent credit, is half Puerto Rican and lives in
But if Rivera lived 6 miles west of
Rivera has an additional downside though: she’s a woman. Women paid on average close to
“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
Broader factors, such as population and density, also drive up premiums in densely populated areas.
“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
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
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
“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.
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