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Minority Neighborhoods Pay Higher Car Insurance Premiums with the Same Risk

10 points by kposehn 10y ago

danielvf 10y ago
"...some major insurers charge minority neighborhoods as much as 30 percent more than other areas with similar accident costs" If this effect is true, any insurance company can make a many millions by charging these neighborhoods 10% less than the competition (which is still 20% more income per policy ), for the same payout rate. Given that this apparently has not happened yet, I wonder if there is some other factors involved. For example my car insurance policy has a discount because my house insurance policy is with the same company. In addition most companies give multicar discounts as well. Heck, I also get a good discount for paying in six month chunks, rather than monthly. Could the effect in the article just be that white people tend to own more cars per household, tend to have a higher rate of owning their own houses, and tend to pay in longer was than monthly?
- FullMtlAlcoholc 10y ago
  Reminds me of this joke: An economist and a normal person are walking down the street together. The normal person says “Hey, look, there’s a $20 bill on the sidewalk!” The economist replies by saying “That’s impossible- if it were really a $20 bill, it would have been picked up by now.”
moftz 10y ago
If they were just looking at a 30yo woman with a safe driving record, did they account for things like property crimes committed in the poorer neighborhoods? If I'm more likely to live in a poorer urban neighborhood, I'm probably parking on the street in an older, cheaper car like a Honda or Toyota (the car most likely to be stolen). If someone steals the car or there is a break-in, premiums might not go up for you but they might go up for everyone around you (i.e. your zipcode). Now take a look at a white neighborhood, the area is more likely to be wealthier so the cars are probably newer and more expensive so they aren't as high up on that list of most stolen. There may be more break-ins but when that whiter, wealthier neighborhood is more suburban, there going to be more cars parked in garages so less break-ins. I've always assumed zipcode had to deal with where you keep your car at night and the crime that happens around your car. Based on the data they show, my hypothesis still hasn't been disproved. If anyone can show me that minority neighborhoods have less car thefts and car break-ins than whiter ones, I'll gladly change my thinking. I'm not ruling out the possibility of their being some systemic racism in insurance premiums but I'm looking at if there is any statistical reasons as to why things are the way they are. Perhaps insurance premium models are outdated like the past article on the relationship between office AC temps and the changing of the gender ratio in the workplace.
deleted 10y ago
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10 points by kposehn 10y ago

"...some major insurers charge minority neighborhoods as much as 30 percent more than other areas with similar accident costs" If this effect is true, any insurance company can make a many millions by charging these neighborhoods 10% less than the competition (which is still 20% more income per policy ), for the same payout rate. Given that this apparently has not happened yet, I wonder if there is some other factors involved. For example my car insurance policy has a discount because my house insurance policy is with the same company. In addition most companies give multicar discounts as well. Heck, I also get a good discount for paying in six month chunks, rather than monthly. Could the effect in the article just be that white people tend to own more cars per household, tend to have a higher rate of owning their own houses, and tend to pay in longer was than monthly?

FullMtlAlcoholc 10y ago
Reminds me of this joke: An economist and a normal person are walking down the street together. The normal person says “Hey, look, there’s a $20 bill on the sidewalk!” The economist replies by saying “That’s impossible- if it were really a $20 bill, it would have been picked up by now.”

moftz 10y ago

If they were just looking at a 30yo woman with a safe driving record, did they account for things like property crimes committed in the poorer neighborhoods? If I'm more likely to live in a poorer urban neighborhood, I'm probably parking on the street in an older, cheaper car like a Honda or Toyota (the car most likely to be stolen). If someone steals the car or there is a break-in, premiums might not go up for you but they might go up for everyone around you (i.e. your zipcode). Now take a look at a white neighborhood, the area is more likely to be wealthier so the cars are probably newer and more expensive so they aren't as high up on that list of most stolen. There may be more break-ins but when that whiter, wealthier neighborhood is more suburban, there going to be more cars parked in garages so less break-ins. I've always assumed zipcode had to deal with where you keep your car at night and the crime that happens around your car. Based on the data they show, my hypothesis still hasn't been disproved. If anyone can show me that minority neighborhoods have less car thefts and car break-ins than whiter ones, I'll gladly change my thinking. I'm not ruling out the possibility of their being some systemic racism in insurance premiums but I'm looking at if there is any statistical reasons as to why things are the way they are. Perhaps insurance premium models are outdated like the past article on the relationship between office AC temps and the changing of the gender ratio in the workplace.

deleted 10y ago

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