Congress bans auto insurers from using income as a hidden pricing tool
H.R. 3664 — PAID Act · Filed by Bonnie Watson Coleman (D-NJ) · 2 cosponsors · Introduced May 29, 2025 · Referred to committee
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What it does
This bill prohibits auto insurers from using income-related factors—like education, occupation, employment status, home ownership, credit scores, and prior insurance history—to set rates or determine eligibility. Insurers must disclose all underwriting rules publicly and submit annual reports to the FTC proving their algorithms don't discriminate by race, color, national origin, religion, sex, sexual orientation, disability, or gender identity. Consumers gain the right to sue for actual damages plus punitive damages and attorney fees; the FTC and state attorneys general can also enforce the law with civil penalties of at least $2,500 per violation.
Why we flagged it
The bill's core mechanism is a straightforward prohibition on the use of income-proxy variables in auto insurance underwriting and rating, paired with transparency and enforcement provisions. It is consumer-protective legislation, not a subsidy, carve-out, or deregulation.
What the text implies
- Insurers may respond by shifting to alternative risk variables (e.g., telematics, driving behavior monitoring) that could create new privacy concerns or surveillance-based pricing.
- The public disclosure requirement for all underwriting rules and rate filings may expose proprietary actuarial models to competitive copying or regulatory gaming.
The full analysis lists 5 implications of this text.
Who stands to gain
lower-income consumers (direct premium savings); consumer advocacy organizations (enforcement and litigation); plaintiff attorneys (private right of action with fee-shifting)