People of colour continue to pay hundreds of pounds more each year for their car insurance compared to white people, according to Citizens Advice research.
One year on from first uncovering people of colour paying £250 more for car insurance, Citizens Advice is once again shining a light on what it calls an ‘ethnicity penalty’ after the FCA has failed to take action.
The charity analysed the car insurance costs of over 15,000 people it helped in 2022, and found firms to be charging people of colour 40% more than white people. For Black customers, this rises to charging almost 49% more, or £300 more, than for white customers. In total, Citizens Advice estimates people of colour paid £180 million more on car insurance in 2022, compared to white people.
With household bills rising across the board, the charity estimates over one million people cancelled their car insurance last year amidst pressure from rising bills. Worryingly, people of colour were three times as likely to cancel their car insurance than white people. With the cost-of-living crisis disproportionately impacting people of colour, the ethnicity penalty is compounding this problem.
Citizens Advice says the FCA needs to step up and take the reins, with monitoring and clear enforcement action if car insurance firms cannot explain these ethnicity pricing differences. The charity says these differences show people of colour may be subject to indirect discrimination, which is covered by the Equality Act. This means that even if firms don't gather data on ethnicity or use ethnicity data when determining prices, their pricing decisions could still be considered discriminatory given the link Citizens Advice has uncovered between ethnicity and insurance costs.
Dame Clare Moriarty, Chief Executive of Citizens Advice, said:
“This is a truly worrying link between ethnicity and insurance costs, but one year on and the FCA is still nowhere to be seen.
“While many people are battling cost-of-living pressures, it is shocking that people of colour are also facing higher car insurance costs because of their ethnicity.
“This ethnicity penalty is an expensive and unfair burden on people of colour. It’s time for insurance companies to stop hiding behind algorithms and for the FCA to get off the sidelines and take action.”