Car insurance costs more for drivers in ethnically diverse areas: Report

QUOTES for car insurance were found to be higher in areas in England with large ethnic minority populations, according to an investigation by the BBC.

The details of drivers were used to get thousands of quotes in different locations. However, when the driver’s address corresponded with an address with a higher number of ethnic minorities, the quotes were a third more expensive.

The insurance industry body said ethnicity was not a factor in pricing. A spokesperson from the Association of British Insurers (ABI) said: “Insurers do not and cannot use ethnicity as a factor when setting prices, and our members comply with the Equality Act 2010.

“However, we recognise that these and other similar findings raise an important policy debate.”

The BBC investigation chose 6,000 addresses from a spread of more and less wealthy and diverse areas, selecting 20 in the most deprived and 20 in the least deprived for each English local authority. All other details – such as the driver’s age, job, driving history and car model – were kept the same.

Crime and road accident levels, both of which are known to affect insurance premiums, were also taken into account.

Insurance companies don’t explain exactly how an individual’s car insurance is calculated, although address, age and driving history lead to obvious fluctuations in quotes.

However, the BBC’s investigation showed that when it came to location, on average, car insurance quotes were 33 per cent higher in the most ethnically diverse parts of England, compared with the least diverse.

The Citizen’s Advice bureau called on the Financial Conduct Authority (FCA) to “get off the sidelines and investigate why people of colour are being charged so much more”.

“We recently asked the largest motor insurers to show us how they ensure their pricing models do not discriminate based on ethnicity, and we are reviewing their responses,” said an FCA spokesperson. “The law is clear that insurers must not discriminate based on certain characteristics, like race and ethnicity.

“They need to be sure, and be able to reassure us, that they are not doing so. Our rules also mean insurers should only sell products that provide fair value to their customers.”