Illinois targets alleged bias in car insurance pricing
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios
Illinois' secretary of state is trying to change how much drivers pay for car insurance.
Why it matters: A variety of factors determine car insurance rates, including credit score, ZIP code and age, rather than just driving record. Secretary of State Alexi Giannoulias calls this "economic injustice" and says it leads to more uninsured drivers on the road.
Driving the news: Giannoulias has launched the "Driving Change" campaign with a series of town halls and a website calling for drivers' stories about their auto insurance and rate increases.
- The goal is to build enough support for legislation in the Illinois General Assembly to change the way insurance companies determine rates.
Reality check: Drivers will move one block and see their insurance jump sometimes 30%, the secretary said, and his office has heard from people who register their cars at a family member's address in a ZIP code with a better rate.
Flashback: The Illinois House introduced a bill last year to prohibit insurance companies from using credit score, ZIP codes and age as factors in determining rates, but the bill didn't make it to a vote.
- During this year's spring session, a bill was filed that requested a study into rate-making practices, but the Senate didn't consider it.
By the numbers: 8.5 million drivers are registered in Illinois, according to the secretary of state's Office.
- 630,000 drivers were cited last year for driving without insurance, Giannoulias said.
What they're saying: "Policies based on credit rating disproportionately impact people with lower incomes and people of color," Giannoulias said. "In fact, an Illinois driver with good credit and a DUI will get a lower premium than a driver with poor credit and no DUI."
- "Illinoisans living in predominantly minority ZIP codes pay at least 10 times more than those living in non-minority ZIP codes," the secretary added.
The other side: "Our use of a credit-based insurance score (CBIS) helps us better match price to risk. In fact, CBIS is standard practice in the industry. Still, it is just one of the many factors we use, where allowed, in our effort to charge a fair and lawful price for each policy," State Farm spokesperson Gina Morss-Fischer tells Axios in a statement.
- "A Federal Trade Commission study released in 2007 concluded that credit-based insurance scores are effective predictors of future auto insurance losses."
- Axios also reached out to the Illinois Insurance Association but did not hear back.
What's next: The secretary's office is hosting town halls across the state in the coming months, with the first one on Aug. 20 at Bright Star Church in Grand Boulevard.