PIA National was joined by other insurance trades in a letter to the House Financial Services subcommittee on Oversight and Investigations in advance of its hearing this week on “Examining Discrimination in the Automobile Loan and Insurance Industries.” This hearing follows legislation (H.R. 1756) introduced by Rep. Rashida Tlaib (D-MI) that would prohibit auto insurance companies from using consumers’ credit scores in calculating their insurance rates.

In the letter, PIA National and the other trades note the successful state-based insurance regulatory system in protecting consumers across all lines of insurance, including auto. States have laws in place to prevent discrimination in insurance pricing, and the federal government is not the appropriate place to address an issue that has been most effectively handled at the state level.

In addition, the letter affirms our opposition to discrimination in all forms and our belief that auto insurers are not discriminating on the basis of race when it comes to auto insurance pricing. Rather, they are following best practices from an actuarial standpoint. Credit scores are only one of many elements that insurance companies use to create an insurance score, which helps actuaries and underwriters calculate the risk posed by an individual policyholder.

Consumers often benefit from the use of insurance scoring, because it makes predicting future losses more accurate. That accuracy allows pricing to be more precise. In fact, insurance companies report that the use of insurance scores lowers most consumers’ premiums.

PIA National will continue to work with members of the House on this issue.