Congress considering regulating the way car insurance rates are set

Updated: Mar. 10, 2020 at 9:52 AM EDT
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RICHMOND, Va. (WWBT) - Congress may consider a ban on linking credit scores to car insurance.

What you do behind the steering wheel, how you handle a vehicle, whether or not you’ve had accidents may not make a bit of difference in the cost of your insurance.

“Your story was so instrumental in bringing this issue back to life. The reality is this issue is something we’ve been crusading for 15 years and without national coverage on this issue I don’t think we’re ever going to get legislators to actually move on this practice,” Eric Poe said.

Poe is the Chief Operating Officer of Cure Auto Insurance, a nonprofit competitor to the big insurance companies. The cure doesn’t use education or occupation to set rates.

In our story last month we exposed how many car insurance companies do use certain information to set rates.

In the story, we showed you how a woman who is a waitress with a perfect driving record kept getting higher insurance quotes than a woman who is a doctor with a DUI.

We did this multiple times on the Geico and Progressive insurance sites and the rate quote always dropped for the DUI Doctor.

Both organizations did not comment directly and referred us to an insurance lobbying group.

“So what you’re telling me is there is an extra tax for being poor imposed on these people by the industry?" Congressman Lacy Clay (D) Missouri said in a Congressional Subcommittee for House Financial Services.

The hearing was called Drivers of Discrimination.

Eric Poe was called to testify after our initial reporting. He answered, “Yes!-- I have been a safe driver my entire life but simply because I’m poor I’m going to pay 40 percent more for car insurance.”

The committee is considering two bills-- one would block insurers from factoring a consumer’s credit history when setting auto rates.

The other calls for a study of the issue-- both are staunchly opposed by the insurance lobby.

“By making insurance companies guess at exposure would be in order to remain solvent they would necessarily have to increase rates,” Erin Collins testified in the hearing.

Collins is the Vice President of State Affairs for the National Association of Mutual Insurance Companies (NAMIC).

Collins testified your driving record shouldn’t be on the only factor in setting a rate.

“In terms of driving records I do know that they are notoriously inaccurate and I think that we have shown that a majority of drivers in America are benefited from a full picture of risk, benefited by as many factors as can be contemplated,” Collins said.

Others in the industry say consumers still, ultimately, have the power because they can shop around.

“That’s like saying that we’re ok with a practice that discriminates against poor people and you can shop someplace that doesn’t do that. We’re ok with this as public policymakers in this country. It makes no sense to me,” Poe said in an interview before the hearing.

Some members of the committee suggest states alone should be responsible for regulating the insurance industry.

“Unfortunately regulators around the country have fallen flat on this issue and we need support from the federal government to say you need to at least have a bare minimum if you’re going to make people buy insurance. We’re going to make sure you have a floor," Doug Heller testified.

Heller is an Insurance Expert with the Consumer Federation of America.

The committee has yet to take a vote. There’s also another bill called the PAID act that is also awaiting action.

It’s an issue congress is considering and we will keep tracking.

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