CPAN Joins Effort to Combat Systemic Racism in Insurance Industry, Joining 17 Nationwide Consumer Organizations
LANSING, Mich.—(Nov. 24, 2020)—Joining with 17 other consumer organizations from across the country, CPAN—the consumer advocate for auto insurance policyholders, those who have been injured in a motor vehicle crash and the medical providers caring for them—has co-signed a letter to the National Association of Insurance Commissioners’ (NAIC) Special Committee on Race and Insurance, calling on its members to create tools to fight systemic racism in the insurance industry.
The Special Committee was formed by the NAIC—which represents the top insurance regulators in all 50 states—earlier this year to address racial inequality while promoting diversity in the insurance sector.
CPAN President Devin Hutchings said the letter aligns with CPAN’s long battle to hold auto insurers accountable in Michigan.
“We know that policyholders in Michigan are victims of systemic racism, especially in cities like Detroit and Flint,” Hutchings said. “Residents in minority neighborhoods often pay far more for insurance than those in white neighborhoods, and there’s simply no justification for it. We need a comprehensive, holistic approach to addressing structural problems in the auto insurance industry.”
CPAN’s research over the years has brought to light numerous incidents of discrimination in the auto insurance industry, including insurers setting rates based on gender, ZIP code, marital status and more. The 2019 auto reform ended some of these practices, but the new law does not protect against redlining, the practice of charging consumers in certain areas of Michigan, such as Detroit, much more for auto insurance than those who live across the street in a neighboring municipality.
The letter notes that for years consumer stakeholders like CPAN have called upon the NAIC to take action to address unfair underwriting, pricing, and other practices that have disproportionately harmed communities of color.
“Insurers and their trade associations have often made the false claim that companies cannot be discriminating on the basis of race or ethnicity if they do not explicitly consider race in their practices,” the letter says. “That, of course, entirely misunderstands the notion of disparate impact and the way systemic racism insinuates itself into so many aspects of economic life.”
The letter highlights three priorities the NAIC can address to protect consumers from discrimination:
Require insurers to examine every aspect of their operations – marketing, underwriting, pricing, claims settlement, and antifraud – for proxy discrimination against protected classes.
Develop a more robust and granular program of data collection for market regulation.
Demonstrate a commitment to this work by directing as many or more resources toward addressing systemic racism in insurance as the NAIC does for other priority projects, such as group capital standards, long term care insurance, principles-based reserving, or amending the anti-rebating provisions of the Unfair Trade Practices Model Act.
The letter can be viewed here.
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CPAN is a broad coalition of health care providers, patient advocates and accident survivors who are committed to preserving Michigan’s model auto no-fault insurance system and ensuring that all Michigan drivers have fair and affordable rates. For more information, please visit www.CPAN.us.