People in Missouri’s minority neighborhoods face excessive prices for basic auto coverage because of insurance company practices that Consumer Reports and ProPublica say suggest a form of redlining.
A report Wednesday by the two publications cited their own research using data from four states — Missouri, Texas, Illinois and California. The authors said the data showed that insurance premiums in those four states are higher in ZIP codes with largely minority populations even when adjusting for the insurance risks in those neighborhoods.
“This disparity may amount to a subtler form of red-lining, a term that traditionally refers to denial of services or products to minority areas,” the online report said.
Julia Angwin, a senior reporter at ProPublica, said largely minority neighborhoods routinely see higher prices than nonminority neighborhoods for a variety of services and goods. The report sought to test the insurance industry’s contention that higher risks accounted for higher premiums for basic auto liability coverage in largely minority markets.
Angwin called Missouri’s auto insurance regulation “middle of the road,” which made the finding of unexplained price disparities all the more significant.
Redlining often is more closely associated with the housing market and was the subject of complaints raised last year in a Kansas City-area bank merger.