FTC says blacks and Hispanics pay more when credit is used to set insurance prices

Published: July 24, 2007, 4:11 pm

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

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