Businesses, Consumer Groups Call Out New Jersey Assembly’s Failure to Advance Bill Ending Discrimination in Setting Auto Insurance Rates

More than 10,000 New Jersey residents have written letters urging Assembly legislators to advance A-1657, which the State Senate passed in January.

Trenton—A coalition of business leaders, racial justice groups, and consumer advocates today called out the New Jersey Assembly and Assembly Speaker Craig Coughlin for their failure to advance S111/A-1657, which would help end racial discrimination in setting auto insurance rates. The Senate passed the bill in January, but it remains pending in the Assembly Financial Institutions and Insurance Committee, and was not brought up at the Committee meeting today, one of the final hearings of this year’s lame-duck session. 

Coalition members stated that a failure to advance the bill ignores more than 10,000 New Jersey residents who have written letters to their Assembly members calling for them to quickly pass legislation. It also helps perpetuate long-standing racial and socio-economic inequities in setting auto insurance rates that force Black and Brown drivers to pay higher premiums, and make it much harder for communities of color to achieve affordable transportation and prosperity.

“This is a racial and social justice priority that must be addressed now, not next year or the year after,” said Cuqui Rivera, Executive Secretary of the Latino Action Network. “Car insurance is a major expense and is essential for any family trying to build wealth and economic security. Speaker Coughlin, it’s time for the Assembly to end auto insurance policies that have harmful consequences for Latino and Black communities and our most vulnerable residents.”

“It is evident from those drivers that we have heard from that the use of credit scoring, occupation and education as factors to determine auto insurance premiums is wrong and should be abolished in our state,” said John Harmon Jr., President of the African American Chamber of Commerce of New Jersey. “It is mindboggling to me that any elected official in our state, much less the Speaker of the Assembly, would seek to perpetuate a practice which increases auto insurance premiums for New Jersey drivers, and which has nothing to do with an individual’s driving record.”

“As the voice of 120,000 Hispanic small business owners in the state of New Jersey, we believe that harmful insurance policies directly affect the growth of our business community,” said Carlos Medina, Statewide Hispanic Chamber of Commerce of NJ’s President and CEO. “Our small businesses contribute more than $20 billion to the state’s economy, and establishing policies with unbiased criteria and fair rates will benefit our economy and the entire minority community. We need our Assembly Legislators to champion and advance this bill.”

Currently, auto insurance companies in New Jersey are allowed to set rates partly by using factors such as a person’s education, their credit score and what job they hold. These factors do not reflect consumers’ driving history but do serve as proxies for income and race.

Research compiled by the Consumer Federation of America in 2020 found that New Jersey drivers living in majority Black and Latino communiites were charged higher premiums on average than drivers living in majority white New Jersey communities. People living in majority Black ZIP codes pay 49.5% higher premiums and people living in majority Latino ZIP codes pay 49.9% higher premiums. This holds true even for drivers in majority-minority neighborhoods with spotless driving records. The practice of using education, credit scores and employment to set rates provides discounts to white drivers with unsafe driving records while unfairly price-gouging lower-income Black and Brown drivers with good or even perfect driving records.

S111/A-1657 was championed in the Senate by Senators Nia Gill, Teresa Ruiz, Nilza Cruz-Perez and Nellie Pou, and would prevent insurers from using credit scores, employment, and education in setting auto insurance rates. United States Senator Cory Booker and Congresswoman Bonnie Watson Coleman introduced similar legislation at the federal level in the fall of 2020, the Prohibit Auto Insurance Discrimination (PAID) Act—H.R. 3693.  

But the coalition notes the hard work of these Legislators of color has been targeted by insurance industry misinformation efforts. The industry is not transparent with consumers about how they set rates, and is especially secretive about the discriminatory factors they heavily rely on to set rates.

“It’s time for our entire Legislature to come together to end the downward spiral that many Black and Latinx drivers experience due to these institutionalized racist policies of setting insurance rates,” said James Williams, Director of Racial Justice Policy at Fair Share Housing Center. “We applaud the Senate for doing its part. Now Speaker Coughlin and the Assembly need to do theirs by throwing their full support behind A-1657 and voting against systemic racism.”

 “We elected our Assembly to ensure all New Jerseyans have the same opportunities to prosper,” said Dena Mottola Jaborska, Associate Director of New Jersey Citizen Action. “Delaying this vote any further perpetuates a longstanding hardship on our communities of color and our working families. We urge the Assembly to put their interests before that of insurance companies, and take action now.”  

The insurance industry claims the legislation would disrupt the New Jersey market, result in higher insurance rates for everyone, and make it difficult for insurers to make a profit. But evidence shows these claims are baseless. Massachusetts, New York, California and Michigan have already banned occupation and education as auto insurance premium-rating factors; Massachusetts, California and Hawaii have also banned the use of credit scores. Auto insurance markets are stable and operate quite well in those states. Similar legislation is pending in other states throughout the country. 

Research by CURE Auto Insurance, the only New Jersey insurer who does not use education, occupation and credit score to set rates for customers, shows this legislation would not result in higher average premiums for New Jersey drivers. Root Insurance, which offers lower insurance rates for drivers who score well on app-based driving tests, is eager to test the New Jersey market once the bill passes.

“New Jersey’s consumers deserve fairer car insurance rates,” said Julie McPeak, Root Deputy General Counsel and the former commissioner of the Tennessee Department of Commerce and Insurance. “Passage of S-111/A-1657 will pave the way for New Jerseyans to have access to car insurance based primarily on their driving ability, not discriminatory factors like education and occupation.”

The coalition includes the New Jersey African-American Chamber of Commerce, the New Jersey Hispanic Chamber of Commerce, Latino Action Network, Fair Shair Housing Center, Consumer Reports, New Jersey Citizen Action, SEIU 32BJ, Faith in New Jersey, New Jersey Anti-Poverty Network, Consumer Federation of America, Root Insurance, CURE Auto Insurance. New Jersey Policy Perspective and the New Jersey Alliance for Immigrant Justice.