Published: September 2016

Monitoring availability and affordability of auto insurance requires key data

Consumer advocates have long argued that low-income drivers are price-gouged when it comes to car insurance quotes. In response, the Federal Insurance Office (FIO) set a standard that recognizes auto insurance as “unaffordable” when the average premium in a community exceeds two percent of the community's median household income. The FIO is also preparing to publish its first report on auto insurance affordability with help from the insurance industry. Advocates are urging the FIO to require mandatory participation from some of the biggest insurance companies, instead of relying on the companies’ voluntary submission of data. The group also asks the office to evaluate premiums at the zip code level to ensure the affordability analysis accurately represents the cost of insurance around the nation.

Consumer Action joined a coalition of 40 consumer, community and civil rights organizations in submitting comments to the Federal Insurance Office (FIO) in favor of the recently adopted affordability standard and urged the office to move forward with its first report by the end of the year. The groups applauded FIO for setting a standard that recognizes auto insurance as unaffordable when the average premium in a community exceeds two percent of the community's median household income.

In their letter, the organizations called on FIO to strengthen its proposed data collection approach, which would rely, in part, on the voluntary submission of information about insurance prices by the nation's largest insurance companies. The groups called on FIO to expand the set of insurance companies that would provide data to include all companies that collect more than $100 million in premiums annually, as opposed to the proposed threshold of more than $500 million in premiums. Most importantly, the groups called on FIO to make the reporting of ZIP code level premium data mandatory.

Lead Organization

Consumer Federation of America (CFA)

Other Organizations

Alaska Public Interest Research Group | Americans for Financial Reform | Americans for Insurance Reform | Arkansans Against Abusive Payday Lending | Center for Justice & Democracy | Citizen Action/Illinois | Consumer Action | Consumer Federation of America | Consumer Federation of California | Consumers for Auto Reliability and Safety | Consumers Union | Delaware Alliance for Community Advancement | Delaware Community Reinvestment Action Council, Inc. | Florida Alliance for Consumer Protection | Fund 17 | Georgia Watch | Indian People's Action | Indiana Assets & Opportunity Network | Kentucky Equal Justice Center | Maryland Consumer Rights Coalition | Massachusetts Consumers Counci | Minnesota Asset Building Coalition | NAACP | Neighborhood Housing Services of Greater Cleveland | New Economy Project | New Jersey Citizen Action | North Carolina Consumers Council | North Dakota Economic Security and Prosperity Alliance | Oregon Consumer League | PICB INC | Rural Dynamics, Inc. | South Carolina Appleseed | Southern Poverty Law Center | Tennessee Citizen Action | United Policyholders | Vehicles for Change | Virginia Citizens Consumer Council | Virginia Organizing | Western New York Law Center | Woodstock Institute

More Information

To read the coalition letter, click here.

For more information, visit CFA's website.

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