H.R.3664 - Prohibit Auto Insurance Discrimination Act; PAID Act (119th Congress)
Summary
H.R.3664, the Prohibit Auto Insurance Discrimination Act (PAID Act), aims to prevent private passenger automobile insurers from using certain income proxies to determine insurance rates and eligibility. The bill identifies factors such as education level, occupation, employment status, home ownership status, credit score, and ZIP Code as income proxies that unfairly impact lower-income drivers. It mandates that insurers submit information to the Federal Trade Commission (FTC) to demonstrate their practices do not disparately impact customers based on protected characteristics.
Expected Effects
If enacted, the PAID Act would likely lead to a restructuring of how auto insurance rates are calculated, potentially leading to more equitable premiums for lower-income individuals. Insurers would need to adjust their underwriting and rating models to comply with the new regulations, and the FTC would play a significant role in enforcement and oversight. This could lead to some insurers leaving the market, or raising rates across the board.
Potential Benefits
- Reduced Discrimination: Prevents insurers from using factors that disproportionately affect lower-income individuals.
- Fairer Premiums: Could lead to more equitable auto insurance rates based on driving history rather than socioeconomic status.
- Increased Transparency: Requires public availability of underwriting rules and rate filings.
- Consumer Protection: Provides avenues for consumers to take action against insurers who willfully or negligently violate the Act.
- State Enforcement: Empowers state attorneys general to bring civil actions against insurers violating the Act.
Potential Disadvantages
- Potential for Increased Premiums: Insurers may raise premiums for all drivers to offset the inability to use income proxies for risk assessment.
- Market Distortion: Could disrupt the auto insurance market, potentially leading to fewer choices for consumers.
- Compliance Costs: Insurers will incur costs to comply with the new regulations and reporting requirements.
- Unintended Consequences: Eliminating certain risk factors may lead to inaccurate risk assessments and unfair pricing in other areas.
- FTC Overreach: Expands the regulatory authority of the Federal Trade Commission.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's alignment with the Constitution is primarily related to the Commerce Clause (Article I, Section 8), which grants Congress the power to regulate interstate commerce. By regulating insurance practices that affect interstate commerce, the bill falls under this authority. The Equal Protection Clause of the Fourteenth Amendment is indirectly relevant, as the bill seeks to prevent discriminatory practices, although it doesn't directly invoke the clause.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).