Last week, the Federal Insurance Office of the Treasury Department released a final definition of auto insurance affordability that will serve as the basis for future research and evaluation of the auto insurance market.  In response, Consumer Federation of America director of financial services Tom Feltner released the following statement.

“FIO has taken an important step by, for the first time, defining affordability for auto insurance, which is unaffordable in many lower income communities and communities of color.

Every state but New Hampshire requires drivers to purchase auto insurance. When average premiums exceed two percent of the median income in lower-income communities and communities of color, that is a clear indication that state insurance departments and policymakers must act to improve affordability and accessibility so that drivers can comply with state insurance mandates.

CFA applauds FIO for advancing this important issue and will be reviewing the details of the proposal in the coming weeks.  As part of that review, we will pay particular attention to how data will be collected and provide further comments to ensure the data reflect the actual premiums that residents of lower income communities and communities of color face in the market.  We hope that the result of this effort will be a clearer understanding of the auto insurance market and its affordability or unaffordability in communities around the country.”

FIO is seeking comments on this proposal by September 12, 2016.

A factsheet describing the details of the final working definition of affordability is available here.

Contact: Tom Feltner 202-618-0310; Robert Hunter 703-528-0062