More fuel for the fire over the growing use of credit scoring to price auto insurance: The Federal Trade Commission said today that, as a result, African Americans and Hispanics will pay more for coverage.
The FTC report (read it here) also supports an insurance industry claim: that credit scores are accurate predictors of the claims consumers will file. But in a release accompanying the report, it put an official imprimatur on a common allegation by consumer advocates: that African Americans and Hispanics tend to have lower credit scores, and will suffer financially if scores are used to set insurance premiums.
Advocates were quick to respond.
“It’s not fair that consumers with spotless driving records can be penalized with higher premiums just because of their credit score,” Norma Garcia, a senior staff attorney at Consumers Union, said in an e-mailed statement. “Insurance premiums should be based on the risk of an accident, not a consumer’s bill paying record for other goods and services.
Comments (1)
Accidents are not the only claims put auto insurance and why should I with a perfect 30 years of driving pay extra because I live in the center of a major city with a zip code that contains a lot of minorities.
Zip code pricing is unfair.
Posted by Dan Santarelli | July 26, 2007 2:22 PM
Posted on July 26, 2007 14:22