
Is insurance more expensive in Black neighborhoods? - ddispaltro
https://www.goodcover.com/blog/is-insurance-more-expensive-in-black-neighborhoods/
======
jbarciauskas
There are a lot of replies here asking about correlation with non-racial
factors such as economics or crime. The fact of the matter is that Blacks in
America are poorer, suffer higher rates of unemployment, lower educational
attainment and are forced to live in higher crime areas as the result of
decades of racist housing policies and centuries of oppression. This is
reflecting that legacy. Black people pay many different taxes merely for being
Black in America, this is just another in a long list. As another example,
Black people pay higher tax rates due to higher relative property assessments
([https://www.washingtonpost.com/business/2020/07/02/black-
pro...](https://www.washingtonpost.com/business/2020/07/02/black-property-
tax/)).

For a more complete accounting, I recommend reading The Color of Law
[https://www.epi.org/publication/the-color-of-law-a-
forgotten...](https://www.epi.org/publication/the-color-of-law-a-forgotten-
history-of-how-our-government-segregated-america/)

~~~
rbecker
> Blacks in America are poorer, suffer higher rates of unemployment, lower
> educational attainment and are forced to live in higher crime areas as the
> result of decades of racist housing policies and centuries of oppression.

How do they fare in other countries, with different histories?

Edit: Expanded the question to make it clearer.

~~~
jbarciauskas
I don't understand the question.

The OP was edited in response to this, but I'm still mystified. I'm not making
a particular claim about anything other than the experience of Black people in
America, so I don't see how the question is relevant.

~~~
rbecker
How is it _not_ relevant? When studying any phenomenon, why blind yourself to
all data except that from the US? Comparing with other countries is the first
thing you'd do when looking at public transport or healthcare, so what makes
this case different?

~~~
AstralStorm
The problem being, the countries with major numbers of people of African
descent are, you guessed it right, in Africa and completely different
economically from United States of America.

What such a comparison would prove? That poor people in a rich country are on
average better off than people in a poor country?

Propose a good reference group please. I'd only mildly hazard a guess that
perhaps South Africa might be a good comparison, since it's not a particularly
poor country and has sizable numbers of blacks. Secondary, France, but it has
a very different economical system and has not had obvious racial divides in
near past.

One data point for South Africa:
[https://businesstech.co.za/news/business/129980/](https://businesstech.co.za/news/business/129980/)

Not particularly great there either.

Data for UK is interesting but it's not a valid reference group due to small
presence of blacks:
[https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor...](https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/ethnicitypaygapsingreatbritain/2018)

~~~
rbecker
> What such a comparison would prove?

Prove? No, what can be _learned_. If you want to fix healthcare, you look at
countries with working healthcare systems and see what you can copy. Same
here.

And there's plenty of countries with black populations even outside Africa -
the France and South Africa you mentioned, then there's also the UK, Sweden,
half a million in Germany, a million in Spain, Jamaica, and I'm going to guess
a large number of South American. 1.4 million in Mexico, 300 thousand in India
([https://en.wikipedia.org/wiki/Siddi](https://en.wikipedia.org/wiki/Siddi)),
and I'm sure I missed plenty.

It's the height of US exceptionalist hubris to think nothing can be learned
from all these countries.

~~~
AstralStorm
What can be learned is that pay and employment is stratified by ethic group.
However, UK not as strongly as US or South Africa, and very differently.

Still haven't found data for France, probably have to look for it in French.

For UK, my suspicion is that type of employment for
Bangladeshi/Pakistani/Chinese workers is higher vs lower paying jobs.

This probably does not quite fit the employment structure for blacks in the
USA at all. But if it does, the question is then: why blacks are denied access
to well paying professional jobs?

In British case, the racial differences are mostly caused due to first
generation immigrant biases, such as language barrier or cultural fit. (Esp.
see salaries of older Indian descent.) This should not matter for USA. If it
does, then why is US black culture, extant for many generations, being biased
against?

------
usaar333
As far as I can tell, Goodcover wrote this as marketing to show that they both
have less increased pricing bias toward neighborhoods that are more Black --
and also are significantly cheaper.

It's the significantly cheaper that is most surprising to me. They are about
$100 a year vs. $175 a year for their competitions.

This makes me wonder -- have they managed to cut bloat by 40% or are they
simply using different qualifications to restrict their insurance to lower
risk people? If it's the latter, this comparison is not apples-to-apples.

~~~
TMWNN
>It's the significantly cheaper that is most surprising to me. They are about
$100 a year vs. $175 a year for their competitions.

I pay Goodcover $72/year for renters insurance, versus $148/year for a
comparable policy from Liberty Mutual obtained less than three months earlier,

~~~
rubyfan
many insurance companies have minimum premiums around $100-140 per year for
renters depending on their OIE. renter is usually fairly simplistic in terms
of its segmentation. a persons insurance score is small part of that, coverage
limits like liability and contents coverage will drive cost but also geography
will price perils like theft and weather perils (the later should be light
since renters is really just contents and liability). so you’d expect
geography for renters to be somewhat of a larger influence. it’s unlikely any
insurance carrier is specifically pricing to penalize for the color of your
skin. it is probable though that there are some correlation with something
else they are pricing for.

------
zozin
This is looking at the problem backwards. Neighborhoods with higher
proportions of African-Americans living in them are charged higher insurance
premiums because AAs tend to be poorer, less educated, etc. because of their
unique history in this country (slavery, racism, Jim Crow, etc.), which
results in them being more likely to live in rougher/poorer neighborhoods,
thus warranting higher insurance premiums.

Giving AAs $20 off their insurance policy doesn't fix the problem. We need a
Marshall Plan-type of investment in AA communities and a multi-generational
commitment to try to heal the scar of slavery/racism in this country.

~~~
Simulacra
We have that. It’s called gentrification. If you elevate an area, for whatever
reason, more non-AA’s will move in. Unless you’re speaking about neighborhood
segregation?

------
faitswulff
I'd almost rather flag this submission than deal with commenters seeking to
justify the structural iniquities and ending their train of thought with the
simple correlation between black neighborhoods and crime. Press on! _Why_ is
there more crime? _Why_ is there more poverty? What are the structural reasons
for the two?

~~~
lightgreen
What do _you_ think the structural reasons are?

> I'd almost rather flag this submission than deal with commenters seeking

That approach worries me. People are discussing trying to figure out what’s
going on. It is not hate or spam. Some make mistakes. Some opinions you might
disagree with or even don’t like. If you don’t want to participate, then
don’t. But why trying to block others from discussing the issue?

These attempts to block free speech are very worrisome. Let’s keep at least hn
free from rightthink moderation.

~~~
faitswulff
It's already been flagged, that's why. It's inevitable. Anything to do with
race gets flagged mindlessly on HN.

------
underpand
I'm disappointed that they didn't look at the very obvious input into
insurance risk models: crime rate.

It's very dishonest since it's very obvious. Either complete incompetence or
dishonesty.

~~~
anamexis
I think jbarciauskas said this better than I can, but how is it at all
dishonest? Yes, there may be specific inputs that cause these rates to be what
they are, and those inputs may be obvious. But the conclusion seems equally
obvious, and perfectly honest: insurance costs more in Black neighborhoods.
Acknowledging the inputs only makes a stronger argument for institutionalized
racism.

~~~
hnlurker
It's dishonest because non-black people in those "black neighborhoods" are
also paying the "racist" premium. It's not like non-black people are paying
10% less while living on the same block and purchasing the same insurance.

Car insurance varies by how many miles you drive on average, because, shocker,
driving more miles means a higher risk of a driving accident. What happens if
the data reveal that black people drive more on average and subsequently have
to pay more for auto insurance?? Relatedly, is it sexist that men pay more
than women for the exact same policy on the exact same car in the exact same
zip code? Since men get into more serious accidents, it doesn't appear to be
sexist to me..

Univariate analyses like this need to mump off and die.

~~~
anamexis
> non-black people in those "black neighborhoods" are also paying the "racist"
> premium. It's not like non-black people are paying 10% less while living on
> the same block and purchasing the same insurance.

Yes, of course this is true, no scare quotes necessary. I don't see the
article making any claims to the contrary either, so again, where is the
dishonesty? To use your example, if there was an article claiming that men pay
more for car insurance, would you call that dishonest?

The point is not that insurance companies are directly looking at people's
race and charging them differently based on it. The point is that all of those
covariate factors that make the insurance more expensive in Black
neighborhoods are themselves the result of institutional racism, unless you
think it's just coincidence that Black neighborhoods have higher crime rates,
lower employment, etc.

It follows fairly directly that if predominantly Black neighborhoods pay more
for insurance, then Black people pay more for insurance. Yes, if a white
person moves into a Black neighborhood, they will also pay more for insurance;
this is no less the result of institutional racism.

~~~
hnlurker
The dishonesty is presenting this as a racist thing. The dishonesty is also in
the implication that insurance companies are racist rather than simply
responding to the market. The article is trying to drum up outrage at well
established insurance companies in order to direct money to their business.

Institutional racism. Systemic racism. Oh bother.. You seem pretty confident
about it without presenting any evidence. You haven't even identified which
institution. I hate racism, it's useless and frankly stupid. Just because
groups have different outcomes doesn't make it racist. You probably think that
Google is systemically sexist because it is largely male in STEM departments.
Google might be, but simply having male dominated departments does NOT warrant
that conclusion.

NOTE: I used scare quotes around "black neighborhoods" because they are just
American neighborhoods. Contrary to popular opinion/belief, we aren't (still
or yet) living in a country where your skin color allows or prevents you from
living in any particular neighborhood. Those that claim otherwise, or even
suggest it through veiled implication, ought to present some actual evidence
or STFU.

~~~
anamexis
If you don't believe institutional racism exists, or even Black neighborhoods,
I'm not going to try to convince you. Sorry.

------
kryogen1c
it really is telling that articles like this arent laughed off the face of the
planet.

if this were a univariate, observational study of a medical condition claiming
"some correlation" with an r2 of .3, the authors would be fighting mobs with
pitchforks and torches.

its such a cheap play at current politics. if people cannot discern this from
science, we truly are lost.

~~~
AstralStorm
Weak correlations are fine, as long as they're consistent and statistically
significant.

This generally means that there is a factor causing a misfit with the
simplistic base model. It's fine if the factor is properly identified, which
it is not in this case. I think a logarithmic fit would give much higher R2
than linear. (Logistic fit is commonly used for prices and salaries.)

This problem goes away with multifactor analysis as you see correlation in
errors or not, or using nonlinear least squares, NLS.

------
mturilin
Did they account for other factors like employment rate, crime rate etc?

I wonder if there non-racist explanation for this phenomenon...

~~~
anamexis
I think those factors would be racist explanations, so to speak – saying "it's
not that insurance costs more in Black neighborhoods, it's just that Black
neighborhoods have lower employment rates" only shifts the narrative of
racism.

------
unexaminedlife
I'd recommend moderators look into who flagged this and determine whether it
was warranted...

------
miked85
Objectively, I would assume insurance is more expensive in areas with more
crime, nothing to do with race.

------
tathougies
Is insurance cheaper in Indian neighborhoods? Probably.. Indians in America
are richer than average and thus their neighborhoods have less crime

This is a surface level problem of something much deeper which is the
preponderance of poor disproportionately black neighborhoods. Most blacks are
middle class and live in diverse area but for whatever reason just as there
exist China towns there exist black neighborhoods that remain so and suffer
from disproportionately high rates of crime and poverty. This is what needs to
be fixed .. the insurance pricing is just a symptom of that.

A more interesting metric is what is the average payout and claim rate in
these same neighborhoods with high premiums. How does the premium relate to
those two measures?

~~~
burner831234
Whatever reason is the frustration. Its not "whatever reason" or some huge
unknown. Its decades and decades of policy including redlining and developers
who openly didn't rent or let black americans buy homes and banks that openly
gave black americans with great credit shittier loans while the govt
bankrolled the development of suburbs for white people.

I realize I'm frustratedly typing and I think my frustration is the "aw
shucks, who knows why this is happening. The data is a mess" conversation
while there are entire books and sub disciplines in "subjective" research like
Law, Politics, Geography, Urban development and others that could easily
answer these questions and have many times over.

~~~
diab0lic
I'm not the author of the GP post but I don't think (s)he was implying the
reason was unknown so much as stating that there IS a reason, but not
committing to one single reason so as to not have to argue or justify it.

~~~
tathougies
That's right... we all know the reasons behind this... it's not insurance
rates. Insurance rates are a reflection of the problem, not the source.

------
prepend
I would like to see some real statistical analysis.

This analysis seems rather worthless for purposes of determining if insurance
rates are racially biased.

Here’s an example of a crazy statement given the R2 is .309 “ The chart above
shows some correlation between higher prices for renters insurance and the
percentage of Blacks living in the city.”

I’m no statistician, but I think saying that an R2 of .309 is “some
correlation” without pointing out that so is random noise isn’t helpful.

I would like to see insurance rates comparing racial composition while
controlling for other variables. And it’s kind of shocking that they even
wrote this article without at least attempting it in the post.

~~~
AstralStorm
Something at least as good as the stats done by British government, right? I'd
like to see these sorts of multifactor analysis done as well.

------
spacephysics
“ So, there’s definitely more work to be done – but we thought it’s important
to make a best effort with the messy data we have to start the discussion.”

This contradicts the title of the article. The title implies the insurance is
increased due to racial reasons, rather than it happens that in some
communities that are more prone to theft/criminality, the population for those
insurance areas are black.

I find it hard to believe people today are creating insurance policies that
are increased because of skin color. Rather there tends to be more crime in
specific areas, and people find correlation then assume causation.

~~~
dcolkitt
I agree that this is an important distinction. But isn't there a third option:
the market's not perfectly competitive and pricing isn't just driven by the
cost but also what consumers will bear?

For example, this can be seen in men's vs. women's home staples. Things like
razors and deodorant tend to have much higher list price for their feminine
versions. This isn't because women's razors cost more to make. Nor is it
because executives at P&G are misogynistic pigs.

Rather it's because these products tend to be sold by monopolistic suppliers
who are trying to extract the maximum price that consumers will pay. Women
tend to be burdened with more responsibilities than men, and thus have less
time to carefully comparison shop.

I'm not sure if this explains the racial insurance disparity. But I could
easily imagine it, and we should at least investigate the hypothesis. In
particular black Americans have a lot less savings and financial cushion.
They're also have lower rates of financial literacy. That probably means
they're less likely to comparison shop and more likely to buy low-deductible
policies that tend to be less competitively priced.

~~~
lightgreen
> Women tend to be burdened with more responsibilities than men, and thus have
> less time to carefully comparison shop.

Or maybe because women care more about brands and men just pick what’s
cheaper. Or maybe because men need smaller variety of options. Or maybe
because men consume more razors per store visitor. Or maybe because men spend
less time in stores per dollar spent and selling for men is cheaper. Or a
dozen other reasons.

That claim about women responsibilities is very simplistic and likely wrong.
Unless you have some data to confirm you pr statement, share please if you
have.

~~~
dcolkitt
American adult women have approximately 4 hours less of leisure time per week:

[https://www.pewsocialtrends.org/2013/03/14/chapter-6-time-
in...](https://www.pewsocialtrends.org/2013/03/14/chapter-6-time-in-work-and-
leisure-patterns-by-gender-and-family-structure/)

~~~
lightgreen
That fact does not directly explain why women products are more expensive.

------
lilbaine
Why was this post flagged?

------
Simulacra
“ Black neighborhoods pay 20% more in renters insurance.”

Saved you a click.

