WASHINGTON – U.S. Rep. Rashida Tlaib, D-Detroit, criticized auto insurers on Wednesday for setting rates based on credit scores, gender, marital status and other non-driving factors, saying it’s discriminatory and that Congress should stop it.

“We have a responsibility at the federal level to push back (on these practices), to make sure it’s fair and just for everyone,” Tlaib said at a House Financial Services subcommittee hearing investigating practices in auto lending and insurance.

Michigan, and Detroit in particular, have some of the highest auto insurance rates in the country, and Tlaib has made clear her belief that the use of non-driving factors hurts black, urban drivers more than others.

But it’s not just that, she said:

A woman who gets a divorce, or retires, for instance, can see her credit scores be impacted, meaning she could see her insurance rates go up.

The same could be true for a veteran, she said, like someone she knows, who returned after driving Humvees in Iraq but whose credit score was low, which meant he'd pay high rates just for returning to southeastern Michigan.

Tlaib asked how it was possible that someone with a conviction of driving under the influence of alcohol but who had a good credit score could get a better rate than someone with no DUI but low credit scores, though no one answered the question.

And while she acknowledged that insurance rates across Michigan are higher than practically any other state, she wondered why someone who lives on the Grosse Pointe side of Mack Avenue should pay $3,000 less a year in auto insurance than someone who lives on the Detroit side.

“We call that redlining,” she said. “(And) it’s a discriminatory practice to base (rates) not solely on people’s driving history.”

James Lynch, senior vice president for a research organization that includes some of the country’s biggest insurers, argued that rate-setting is a “color-blind process” and that non-driving factors — including gender, marital status and geography — help accurately predict who will file a claim.



He also said that if Tlaib succeeds in her effort to take credit scoring out of the process, insurance rates would go up for most drivers across the U.S.

“They’re effective, they work,” he said.

Lynch said the only reason that auto rates in Michigan are so high is that the state has a no-fault insurance system and virtually no limit on damages, meaning if someone there has insurance and files a claim, “it’s going to pay and pay and pay forever.” Insurers, he said, have to price that into their policies.

Joshua Rivera, a data and policy adviser for Poverty Solutions at the University of Michigan who has studied auto insurance rates in Detroit and elsewhere, said that doesn’t explain why the premiums vary so much from driver to driver or place to place.

His own research found in 2018 that Michiganders paid $2,610 a year on average — nearly double the national average. But in Detroit, that annual premium was $5,414.

For many Americans, credit scores — like other factors — are based on forces outside their immediate control and it disproportionately affects low-income families, he said.

“The people who need the cheapest insurance the most are those who are getting charged more,” he said.

Rep. Ted Budd, R-N.C., joined other Republicans on the subcommittee saying discrimination should never play a role in setting auto insurance. But he, like other GOP members, maintained that insurers need to do what they can to accurately set rates and that states should oversee insurers, not Congress.

Enacting legislation such as Tlaib’s, he said, could hurt his own constituents to the benefit of hers.

“I see no reason … why my constituents should be forced to subsidize Michigan or any other state for their seriously flawed state insurance laws,” he said.

Read more:

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Contact Todd Spangler:tspangler@freepress.com. Follow him on Twitter@tsspangler. Read more onMichigan politics and sign up for ourelections newsletter.