Study: Women May Pay More Than Men For Car Insurance

With the exception of those aged 16 to 25, one study found that some women pay more than men for auto insurance in New Mexico, according to a consumer advocacy group.

According to data provided by the Consumer Federation of America, the difference between the average annual pay rates of a single woman and a single man is small as long as all other factors are equal.

But, if a woman has a bad credit history, the rate differences between what that woman pays and what a man with good credit history pays can be significant, the data shows.

One example is a 35-year-old single female driver with a perfect driving record but poor credit who lives in ZIP code 87121, which encompasses an area of ​​the Westside of Albuquerque and west of Albuquerque. This hypothetical woman pays an average of $ 621.20 more per year for auto insurance than a man with better credit.

But disproportionate annual auto insurance premiums are not unique to zip code 87121. That’s true for every zip code in New Mexico, according to data provided by CFA *.

Michael DeLong, research and advocacy associate for CFA, said auto insurance companies use algorithms that include factors that have nothing to do with a person’s driving record. For example, he said most drivers don’t realize that their credit scores are factored into their auto insurance rates.

But, it can turn average car insurance rates into a discriminatory practice, as single, divorced and widowed women pay more, on average, for car insurance than men in general, but also more than men. married woman, DeLong said. That’s true in most states, including New Mexico, DeLong said.

The hypothetical 35-year-old male and female drivers used to determine the average insurance rates in New Mexico for each zip code have both been licensed for 19 years, both have a high school diploma, and both rent their homes. . The two drive a 2011 Honda Civic LX and do a 12 mile trip, five days a week for 12,000 miles a year. The hypothetical man would also, like the hypothetical female counterpart who pays $ 621.20 more, have a perfect driving record, according to DeLong.

Lee Ann Alexander, vice president of government relations for the American Property Casualty Insurance Association (APCIA), said by email that the association could not “verify the accuracy of the findings regarding the kind or relevance of methodology”.

But, she said, “Every piece of information that insurance companies use is only used for one purpose, to predict risk.

“To ensure that auto insurance pricing is fair, affordable, and accessible to as many people as possible, insurers use a wide variety of tools to help determine which drivers are more or less likely to file a claim. claim and the overall cost of claims, “she wrote.

DeLong said credit history is “one of the most important factors” when auto insurance companies factor in risk.

“It seems to have the biggest impact,” he said.

He said insurance companies, when providing proof that women pay more, say there is another factor and “offer a different excuse.”

Credit scores are themselves based on a variety of things, including the percentage of an individual’s available line of credit that is used each month and an individual’s credit composition, depending on Experiential, one of the three credit rating companies.

The U.S. Federal Reserve studied gender differences in credit scores in 2018 and the report found that single men tend to have higher credit scores, on average, than single women. The report found that single women tend to have a harder time paying off debt than single men and have more “heavy use” of credit.

DeLong suggested that ultimately the problem could be that women tend, on average, to make less money than men. Credit rating companies do not ask how much money individuals make. But when people earn less, they could become more dependent on credit cards and have less overall income to shop like a house, which would help with the credit mix.

Additionally, credit scoring, despite its technical algorithms meant to exclude human biases from the equation, reflected “astonishing racial disparities,” according to a National Consumer Law Center. report.

Racial disparities have also emerged in auto insurance, DeLong said. CFA has done studies that show people living in predominantly African-American neighborhoods pay more for auto insurance, even though individuals have perfect driving records, he said.

“We believe that widespread discrimination is still going on. Insurance companies say the [African-American] neighborhoods are denser. But we found African American neighborhoods similar to white neighborhoods, but their African American neighbors pay much higher premiums for auto insurance, ”DeLong said.

DeLong said there is a lack of data on whether auto insurance companies charge women of color driving more than other demographic groups.

“We strongly suspect that women of color pay more,” he said.

Laws in New Mexico

New Mexico has laws that prohibit insurance discrimination, although none are specific to auto insurance alone, said Russell Toal, New Mexico superintendent of insurance.

There is a law which prohibits discrimination in insurance based on race, color, religion or national origin. Another law prohibits sex discrimination in insurance. A third law prohibits insurance rates from being excessive and unfairly discriminatory.

Toal said most insurance companies, and especially auto insurance companies, use complex algorithms. He said based on the experience of staff at the Office of Insurance, which regulates insurance in New Mexico, widows, divorced and single women are treated the same as married women.

But, he added that he didn’t think his office “has the capacity to do the kind of analysis” that NM Policy Report made a report.

DeLong said the state of Colorado recently passed a bill banning unfair discrimination in auto insurance and the use of algorithms, data models, and general information.

California, Hawaii, Massachusetts, Pennsylvania and North Carolina have all passed laws prohibiting the use of gender in auto insurance pricing, DeLong said. California and Massachusetts have passed laws prohibiting the use of credit history for auto insurance pricing.

In 1944, the US Congress passed a law that exempted most insurance companies from federal regulation, DeLong said. It was originally intended to be temporary, but it hasn’t changed.

“Most states have primary responsibility for insurance,” he said.

* Data for this article was acquired by the Consumer Federation of America from Quadrant Information Services, LLC. Data is representative of publicly available data using the variables and the basic profile defined below and individual rates may differ.

Sara R. Cicero