Baltimore Has Greatest Disparity In Car Insurance Premiums Between Racial Groups

Nov. 19--The Baltimore area has the greatest disparity in the country in car insurance premiums between black communities and white communities, a consumer advocacy group said Wednesday.

The Consumer Federation of America found that average premiums for drivers who live in predominantly black ZIP codes in the Baltimore area are nearly double those for drivers in predominantly white ZIP codes.

The group found the disparity across the country, but nowhere was it as wide as in Baltimore. New York had the next greatest disparity.

In previous studies, the CFA and other groups have found that drivers who live in Baltimore and those with less income pay far more in auto insurance premiums than their suburban neighbors.

A state task force is due to report on the affordability of car insurance to the General Assembly next year.

"Our research shows that it's well past time for insurance regulators to more seriously address the impact of insurance pricing practices on people of color as well as low-income communities," said J. Robert Hunter, the CFA's director of insurance.

Maryland Insurance Commissioner Alfred W. Redmer Jr. said his staff regularly reviews the premiums that auto insurers charge to ensure that they are based on the actual projected risk of a claim and aren't discriminatory.

He said many factors are taken into consideration when quoting a premium, including the number of accidents in that jurisdiction and what hospitals charge.

"I can tell you that we are going to be rigorous in making sure that these carriers are able to actuarially justify the rates that they charge," Redmer said. "We are very thorough and rigorous."

The CFA examined data available for most areas of the country from the five largest insurers -- Allstate, Farmers, GEICO, Progressive, and State Farm -- which together represent more than half the market share.

They used a driver profile to represent rates quoted to an unmarried woman with a good driving history, who has graduated from high school, holds a clerical job, and rents her home.

For that typical good driver, the average rate from any of the large insurers would be $640 annually for liability coverage. But in ZIP codes in which African-American residents made up 75 percent or more of the population, the CFA reported, the average premium for that good driver was $1,060.

Steven Weisbart, the senior vice president and chief economist for the Insurance Information Institute, an industry-funded think tank, said he didn't think the CFA's analysis was statistically sound. Any disparity would be based on other factors insurers examine, such as credit score or number of accidents in an area.

"When insurance companies price their policies, they don't even know who's black and whose not," he said. "So they couldn't, even if they wanted to, charge higher rates for African-American policy holders. It would be something that would arise out of the other factors."

Farmers, State Farm, Geico and Progressive referred comment to the Insurance Information Institute. Allstate did not respond to a request for comment.

State Sen. Lisa Gladden, who co-chaired a task force in 2006 that examined car insurance disparities, said she's suspected since her teens that her rate was unfair.

The Baltimore Democrat said that was a common complaint in her ZIP code, which includes middle-class black neighborhoods, predominantly white areas and the lower-income, majority-black area of Park Heights.

"I think it's racism," Gladden said. "You can make sure it complies with the law, but the other thing is to make sure that it is fair, and that somehow my heart doesn't skip a beat because I got my bill."

cwells@baltsun.com

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