Is insurance more expensive in Black neighborhoods? | Hacker News Reader

Is insurance more expensive in Black neighborhoods?

goodcover.com

27 pointsddispaltro45 comments

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...).

For a more complete accounting, I recommend reading The Color of Law https://www.epi.org/publication/the-color-of-law-a-forgotten...

> 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.

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.

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?

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/

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...

> 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), 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.

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?

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.

>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,

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.

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.

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?

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?

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.

Agreed

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

People tend to think of only 1st order effects. They don't tend to think in 2nd, 3rd, ..., nth order effects--not that it's easy to quantify the effects, but it's usually not difficult to see/imagine those potential relationships.

This is why a lot of rhetoric in general is so effective: it prays on focusing on simple first order effects instead of attempting to look at issues holistically. I'm not saying hollistic analysis is simple--far from it--but one needs to be aware that life is really complex with a awhole lot of gray areas.

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.

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.

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.

> 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.

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.

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

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.

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.

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

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

Im fairly certain they didn’t.

This is just an ad masquerading as a study.

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.

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

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

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?

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.

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.

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.

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.

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.

“ 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.

How does it contradict the title of the article?

I think it’s funny that they blame it on “messy data” as their problems seem to be caused by messy analysis.

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.

> 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.

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

https://www.pewsocialtrends.org/2013/03/14/chapter-6-time-in...

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

Why was this post flagged?

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

Saved you a click.

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