“Our findings document what some consumer advocates have long suspected: Despite laws in almost every state banning discriminatory rate setting, many auto insurers charge premiums in minority neighborhoods that exceed not only prices in white areas but also the levels justified by average payouts on claims,” according to the report by Julia Angwin, Jeff Larson, Lauren Kirchner, and Surya Mattu. “This over-pricing may amount to a subtler form of redlining, a term that traditionally refers to denial of services or products to minority areas.”

“The impact of discriminatory insurance prices can have a devastating ripple effect, draining family budgets, limiting employment opportunities, and holding back entire communities from growth,” said Marta L. Tellado, the president and chief executive officer of Consumer Reports. “Whether price disparities arise from bad actors or bad algorithms, the consequences are the same, and CR is committed to ensuring transparency and fairness in pricing for people in all neighborhoods.”

ProPublica filed public records requests in all 50 states and the District of Columbia seeking zip-code level data about liability claims payouts. Only California, Illinois, Missouri, and Texas said they collected the data and provided it.

According to ProPublica and Consumer Reports, many of the insurers that were found to be overcharging minority neighborhoods in these states operate nationally. That raises the prospect that many minority neighborhoods across the country may be paying too much for auto insurance, ProPublica and Consumer Reports suggested.

In each state, Consumer Reports and ProPublica found a significant gap between the premiums charged in minority and non-minority neighborhoods with the same risk:

- In Illinois, 33 of the 34 companies analyzed charged average rates that were at least 10 percent higher for the same safe driver in minority zip codes than in comparably risky non-minority zip codes. Six Illinois insurers had average disparities higher than 30 percent.

- In Missouri and Texas, at least half of the companies evaluated were charging higher rates on average for the same safe driver in high-risk minority communities than in other comparably risky communities.

- In California, eight companies were charging minority zip codes more than 10 percent higher premiums on average than similarly risky non-minority zip codes.

- In Illinois, the disparities remained about the same from the safest to the most dangerous zip codes, but in the other three states the disparities were confined to the riskiest neighborhoods. In those instances, prices in whiter neighborhoods stayed about the same as risk increased, while premiums in minority neighborhoods went up.

Overall, households in predominantly minority zip codes spent more than twice as much of their household income on auto insurance (11 percent), compared with households in majority white neighborhoods (five percent), based on U.S. Census data and the ProPublica/Consumer Reports analysis. The U.S. Treasury Department has defined auto insurance as affordable if it cost less than two percent of household income.

Learn more: http://www.CR.org/carinsuranceinvestigation.