Rep. Morales bill would prohibit pricing
discrimination in auto insurance rates


STATE HOUSE – All Rhode Island drivers are required to purchase auto insurance, but the rate drivers pay can vary widely based on demographic factors like sex, income or ZIP code. Rep. David Morales (D-Dist. 7, Providence) hopes to change that with legislation that would prohibit all forms of discrimination in setting rates for car insurance premiums.

“Using factors that are unrelated and irrelevant to an individual’s driving record to determine auto insurance rates is simply unfair and hurts the economic well-being of working families, particularly people of color and those who live in an urban community,” said Representative Morales. “Let’s be clear, a person’s auto insurance rate should be based on how they drive and their driving record – not their job title, whether they went to college or where they live. In other words, the pricing formulas that auto insurance companies use are just wrong, discriminatory and prioritize excessive profit over providing people with affordable auto insurance coverage. So given that our state requires all drivers to have insurance, all of our people deserve a fair rate.”

According to a 2019 report by the Consumer Federation of America, auto insurers charge different rates based on a variety of demographic factors. That includes charging people with blue-collar jobs more than people with white-collar jobs, women more than men and charging widows more than women whose spouses are still alive. There is a racial component to varying rates as well, as people who live in predominantly Black ZIP codes pay more than people who live in predominantly white ZIP codes.

“Our research shows that auto insurance companies often base rates on factors that reflect consumers' socio-economic status but have nothing to do with their driving safety,” said Michael DeLong, Research and Advocacy Associate with Consumer Federation of America. “We found that basic liability insurance premiums can be higher for people who work at a low-paying job, don’t have a college degree or live in certain neighborhoods, even when they have a perfectly clean driving record. Since Rhode Island requires all drivers to buy insurance, it is essential that the legislature make sure companies price their policies based on customers’ driving behavior, not their demographic data.”

The bill (2023-H 5659) is modeled on similar legislation that Michigan passed in 2019. It would prohibit auto insurance companies from determining premiums and monthly rates using a person’s education level, race, ethnicity, disability, occupation, income, gender, disability, census tract, ZIP code or adjacent ZIP code.