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Witness urges support for S.820 to curb ZIP‑code‑based auto insurance pricing
Summary
A Consumer Federation of America witness told the Joint Committee on Financial Services that S.820 would limit reliance on geographic territory in premium setting, arguing the change would lower burdens on drivers in low‑income and majority‑Black and Latino ZIP codes by assigning a 75/25 weighting between territory and statewide lost cost.
Michael DeLong, research and advocacy associate with the Consumer Federation of America, testified before the Joint Committee on Financial Services urging a favorable report on S.820, legislation to moderate the use of geographic territory in auto insurance premium setting.
DeLong told the committee the bill “is gonna ensure fairer auto insurance premiums for Massachusetts drivers, by moderating the use of geographic territory and premium setting.” He said many Massachusetts drivers find coverage expensive or unaffordable and that some drive without insurance because they cannot pay premiums.
S.820 would limit how much insurers can rely on a driver’s neighborhood or ZIP code by assigning 75 percent weight to the territory’s lost cost and 25 percent to the statewide average lost cost, according to DeLong’s testimony. He said the change “still allows insurance companies to vary premium as based on these, this data, but it prevents the overreliance on ZIP codes that has led to excessively high premiums for various communities.”
DeLong presented research findings to the committee, saying premiums in many Massachusetts ZIP codes where Black and Latino consumers are a majority were, on average, higher than in ZIP codes where the majority of residents are white. “We found that some insurance companies charge safe drivers in 1 ZIP code hundreds of dollars more for auto insurance,” he said, noting that drivers living a mile apart sometimes pay very different rates.
DeLong urged the committee to report S.820 favorably and provided written testimony with additional detail. The hearing record does not show a committee vote on S.820 during this session.
The testimony cited by DeLong frames the bill as a consumer‑protection measure aimed at reducing what he described as an “unfair territorial pricing” practice; DeLong characterized that territorial reliance as often serving “as a harmful proxy for income and race.”
