The Prohibit Auto Insurance Discrimination (PAID) Act has been reintroduced in the US House of Representatives, aiming to ban the use of non-driving-related factors such as credit scores and occupation in determining auto insurance premiums.
House Resolution 336 would extend prohibitions beyond credit scores and occupations to include education level, employment status, gender, ZIP code, census tract, homeownership status, previous insurer, and prior insurance purchases. The bill’s language specifies that these factors would no longer be permitted when insurers calculate premiums.
The legislation, reintroduced as H.R. 3664 in May 2025 by representatives Rashida Tlaib (pictured above) of Michigan, Bonnie Watson Coleman of New Jersey, and Mark Takano of California, builds on prior efforts to curb the use of personal and socioeconomic factors in auto insurance underwriting.
Supporters argue that these factors have little to no relationship to driving performance and that their use perpetuates disparities among different demographic groups.
If enacted, the Federal Trade Commission would be responsible for enforcing the new rules and could develop additional regulations to support enforcement efforts. Violations would be treated as unfair or deceptive acts under the Federal Trade Commission Act, with the FTC authorized to impose civil penalties of not less than $2,500 per violation.
The agency would also have the authority to issue regulations to ensure compliance and prevent circumvention of the law’s provisions.
According to the bill’s sponsors, the use of these factors in underwriting contributes to higher premiums for lower-income drivers while resulting in savings for wealthier policyholders.
Lawmakers emphasized that auto insurance is a non-discretionary expense for most Americans, given that all states except New Hampshire and Virginia require drivers to carry coverage.
Tlaib, a Democrat from Michigan’s 12th District, noted that her constituents face some of the highest auto insurance costs in the country. She said that education level and ZIP code are not reliable indicators of driving ability.
“Yet auto insurance companies use these predatory and discriminatory practices when determining rates,” Tlaib said. “Auto insurance discrimination continues to keep our residents in the cycle of poverty.”
Several states, including California, Hawaii, Massachusetts, and Michigan, have previously implemented prohibitions or limitations on the use of credit-based factors in setting auto insurance premiums.
These state-level restrictions have been introduced in response to concerns over fairness and accessibility in insurance pricing, although such efforts have varied in scope and enforcement.
The insurance industry has opposed similar legislative efforts, maintaining that factors like credit scores and occupation are statistically significant indicators of risk.
Industry representatives argue that restricting these inputs would undermine insurers’ ability to accurately assess policyholders' risk levels, potentially leading to broader premium adjustments across different consumer groups.
Research has indicated that reliance on credit scores and similar factors can result in notable disparities in insurance premiums. Drivers with lower credit ratings can face significantly higher premiums compared to those with stronger credit histories, even when their driving records are comparable.
The use of algorithms and large datasets in insurance underwriting has also drawn attention. Studies suggest that algorithmic underwriting models may unintentionally replicate biases by using variables that correlate with protected characteristics such as race or income.
Critics have called for increased transparency in the algorithms insurers use and for regulatory frameworks that would address potential unintended discriminatory outcomes.
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