EHRC must investigate disproportionate insurance premiums for BAME communities
Any discrimination in the insurance industry is a breach of the Equality Act. It is vital the EHRC take immediate action to resolve this matter.
As anyone who has ever had to obtain cover will know, the world of car insurance is complex and tricky, with small variations in age, job title or address often making a massive difference to your premiums.
Even before I was an MP, I’d heard numerous stories from my Muslim friends and family who felt they had been charged higher premiums than their white neighbours. There has been a long nagging suspicion that if you have a demonstrably ethnic minority name that is reflected in the price that you paid. This is often mirrored in the regular reports we read in the national press.
Since becoming the MP for Birmingham Ladywood I’ve heard from hundreds of constituents who’ve had a similar experience, and it’s an issue that I’ve been exploring for some time. Last December, I hosted a roundtable, bringing together constituents affected with MP colleagues, Richard Webber from Webber Phillips (a consultancy specialising helping business and not-for-profit organisations better understand the cultural, ethnic and linguistic origins of their users), and representatives from the Association of British Insurers and the Chartered Insurance Institute. It’s worth saying at this point that the Association of British Insurers strenuously deny any allegations of direct discrimination based on ethnicity, and I believe that there is no evidence of direct discrimination. However, given the numerous examples that exist there is still the possibility that indirect discrimination may be at play.
That's why last week I wrote to the chair of the Equality and Human Rights Commission (EHRC), calling on them to formally investigate disproportionate insurance premiums for Black and minority ethnic communities.
If the results prove that those with extraordinary claims ratios are linked to individual profiles from ethnic minority backgrounds, it would be clear that indirect discrimination exists
This isn’t the first time the issue has been raised with the EHRC. In May 2019, the House of Commons Treasury Select Committee investigation into consumers’ access to financial services considered whether the Financial Conduct Authority (FCA) or the EHRC should lead on ensuring compliance with the Equality Act. Following this report, the FCA said it would be happy to work with the EHRC on the issue, but I’ve yet to see evidence that the Commission have taken any interest whatsoever. That they have failed to do so harms our nation’s ability to uphold the Equality Act and defend the interests of minorities in the face of potential discrimination, be it intentional or indirect.
At the roundtable I hosted, a proposal was outlined for assessing whether or not indirect discrimination is taking place in the industry. It was suggested that the insurers themselves look at the ‘claims ratio’ of consumers, where they can ascertain if individuals are paying out more for their premiums versus the amount of claims. The consumers anonymised claims ratio can then be matched to ethnicity using origins software, which has shown consistent success in mapping forenames and surnames to ethnicity. It seems clear to me that this proposal gives us the chance to establish once and for all if there is unfair treatment of car insurance customers from ethnic minority backgrounds.
If the results prove that those with extraordinary claims ratios are linked to individual profiles from ethnic minority backgrounds, it would be clear that indirect discrimination exists. If the opposite is true, insurers will finally be cleared of any allegations of foul play.
For too long we have seen injustices committed against people because of slow footed organisations. Any discrimination in the insurance industry would be a breach of the Equality Act 2010, which protects individuals from unfair treatment and promotes a fair and more equal society. As the independent statutory body with the responsibility to encourage equality and diversity, and eliminate unlawful discrimination, it is the Equality and Human Rights Commission’s role to protect these rights for everyone.
As such, it is vital that the EHRC take immediate action to resolve this matter once and for all.
Shabana Mahmood is the Labour MP for Birmingham Ladywood.
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