Maryland Consumers Lose as Legislature Defeats Effort to Stop Redlining in Car Insurance

Andy Spears
3 min readMar 9, 2021

The Consumer Federation of America (CFA) condemns the Maryland House Economic Matters Committee for voting against sensible and urgently needed bills that would reform the way auto insurance is priced in Maryland. According to CFA, Black customers face disproportionately higher premiums in the Maryland insurance market, even for drivers with perfect driving records. Lawmakers introduced two possible reforms to reduce unfair discrimination in auto insurance markets — to reduce pricing by ZIP code (HB 1251 — Del. Alonzo Washington) and to end the use of consumer credit history for determining premiums (HB 221 — Del. Veronica Turner). On Monday, the Committee gutted the credit scoring bill and rejected the territorial pricing reform.

“Maryland consumers should be very disappointed in this Committee, which stood with the insurance lobbyists at the expense of safe drivers, and at a particularly high cost for people of color who feel the brunt of unfair pricing in the market,” said Douglas Heller, CFA’s Insurance Expert. “Every driver in Maryland is required by state law to purchase auto insurance, so state lawmakers need to do a better job of preventing discriminatory pricing in the market, and this week they failed.”

CFA noted that the Committee’s dismantling of the credit scoring prohibition on Monday took the form of an amendment offered by Del. Davis that gutted the bill and replaced it with a toothless industry strategy used to ward off meaningful reform. Del. Davis’s amendment to HB 221, which the Committee approved, is modeled on proposals that insurance industry lobbyists have brought in every state contemplating real auto insurance reform. It would add a weak provision to Maryland law allowing consumers to ask insurance companies to reevaluate their credit score under limited circumstances. The original bill was supposed to address unfair pricing in the Maryland auto insurance market and, particularly, the disproportionate impact that credit scoring has on Black and Brown drivers. It would have made auto insurance more affordable and reduced systemic racism. The amended bill will have no consequential impact.

“Maryland drivers with perfect driving records pay hundreds and sometimes thousands of dollars more for auto insurance, simply because of their credit history. Due to the fact that people of color have faced systemic bias in the financial services sector for generations, the use of credit in car insurance is another way that structural racism takes an economic toll on Marylanders. In Maryland, having a fair or poor credit score instead of an excellent credit score results in a higher premium than being convicted for drunk driving if you happen to have excellent credit. It is a shame that this Committee has decided to gut that bill and replace it with the industry’s plan to preserve the status quo. Other legislators should reject this plan and enact real auto insurance reform,” said Michael DeLong, a Research and Advocacy Associate with CFA.

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Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .