California Insurance Regulator Orders Companies To Stop Discriminatory Pricing

In response to an investigative report, the California Department of Insurance has ordered Nationwide and USAA to not charge motorists in minority neighborhoods more than policyholders with similar risk profiles who live in predominantly white neighborhoods.

Released in April 2017, a report by ProPublica examined publicly-available auto insurance pricing data in four states – Illinois, Missouri, Texas and California. ProPublica found that many insurance companies were penalizing motorists in minority neighborhoods with higher auto insurance costs.

Celebrate excellence in insurance. Join us at the Insurance Business Awards in Chicago on October 26.

While California fared better than the other states featured in the report, ProPublica found that Safeco, Liberty Mutual, Nationwide and USAA charged at least 10% more in minority zip codes than in predominantly white zip codes with the same risk. Liberty Mutual was deemed the worst offender among the major insurers, with a 32% difference in certain zip codes.

Proposition 103 exists in California law to prevent auto insurers from discriminating against minority motorists.

“California drivers are once again benefitting from Proposition 103: to our knowledge, no other state besides California investigated the overcharges exposed in ProPublica’s study,” said initiative author Harvey Rosenfield. “Insurance Commissioner Dave Jones correctly recognized the need to follow up on the ProPublica report…”

The state Department of Insurance has not published the results of its own investigation into the matter. The agency has also chosen not to seek refunds for consumers who may have been overcharged in the past, and it has not revealed what measures it will take to prevent other insurers from committing the same mistake.

Consumer Watchdog has sworn to press for further action from the insurance regulator.

“The Department must provide the public with a full explanation of how it conducted its investigation, and exactly what it found, particularly the data that would show how much people already have been overcharged,” the consumer advocate said in a statement.

“The Department must also ensure that every insurance company doing business in California obey the law that the voters put into place to prevent these kinds of overcharges.”