Consumer Watchdog, a California-based advocacy group, is asking the state’s insurance commissioner Jones to open an investigation into the potential redlining uncovered by a ProPublica report that finds that four auto insurance companies in California mark up prices by as much as 32 percent for drivers in minority neighborhoods compared to white neighborhoods with similar risk.
The ProPublica report drew criticism from the Insurance Information Institute, which questioned its methodology and conclusions. ProPublica hit back at I.I.I. today with its response to the I.I.I.
In a letter sent to Insurance Commissioner Dave Jones today Harvey Rosenfield, the author of the state’s Proposition 103, and Carmen Balber, the executive director of Consumer Watchdog, noted that Prop 103 banned this kind of price discrimination by prohibiting insurance companies from basing auto insurance rates primarily on ZIP code.
Consumer Watchdog asked the Department of Insurance to confirm or refute the report’s findings by opening a formal, public investigation and requiring insurers to submit their risk data by ZIP code.
According to the report, California did better than the three other states reviewed – Illinois, Missouri and Texas. However, the report found that a handful of major carriers charged at least 10 percent more in riskier minority ZIP codes than in ZIP codes were there were a majority of non-minorities.