Context
As part of an investigation the Citizens Advice Bureau (CAB) analysed 18,000 car insurance costs reported by people who came to CAB for debt help in 2021. On average people of colour paid £250 a year more for their premiums. The second part of the investigation undertook an analysis of eight postcodes.
Key points to note
- The charity stress-tested the postcode findings and found that common risk factors of crime rate, deprivation, road traffic accidents and population density, could not account for the difference in price. Citizens Advice is now calling on the FCA to ensure no one pays an ethnicity penalty in the insurance market.
- The ABI’s response can be found here, in which it said “Insurers never use ethnicity as a factor when setting prices and our members comply with the Equality Act. All other rating factors being the same, two people of different ethnicities who live in the same postcode will pay the same premium for their car insurance.” Of particular note is their comment: “As the report says, the research ‘was exploratory, and therefore cannot definitively identify what is driving this trend’.”
Next actions
We have included this item for information and awareness, this may be something the FCA will undertake some thematic work upon in the future.