FTC, Credit-Based Insurance Scores: Impacts on Consumers of Automobile Insurance (Report to Congress, July 2007)

The study Congress ordered under Section 215 of the FACT Act, which the Commission read as including whether credit-based insurance scores act as a proxy for race.

What it measured (Conclusion, §VIII, verbatim): “The FTC’s analysis revealed that the use of scores for consumers whose information was included in the FTC’s database caused the average predicted risk for African Americans and Hispanics to increase by 10% and 4.2%, respectively, while it caused the average predicted risk for non-Hispanic whites and Asians to decrease by 1.6% and 4.9%, respectively. These changes in predicted risk are likely to have an effect on the insurance premiums that these groups on average pay.”

The distribution (verbatim): “more than one-half of all African Americans have credit scores in the lowest quarter of the overall score distribution, and one-half of all Hispanics have credit scores in the lowest third of the overall score distribution.”

The proxy finding (verbatim): “Scores have only a small effect as a ‘proxy’ for membership in racial and ethnic groups in estimating of insurance risk, remaining strong predictors of risk when controls for race, ethnicity and income are included in risk models.”

The sentence on the unexplained cause (verbatim): “It has not been clearly established why scores are predictive of risk.”

The alternative models (verbatim): “although the race neutral models that the FTC built accurately predict risk, they do not decrease the differences in credit-based insurance scores among racial and ethnic groups.” That sentence covers the two race-neutral models: one controlled directly for race, ethnicity and income, one was built only on non-Hispanic whites. A third model discounted the variables with large racial differences and narrowed the gap: “the scores from the discounted model showed 14% of African Americans are in the bottom 10% of scores. The scores from the FTC baseline model, in contrast, showed 27% of African Americans in the bottom 10% of scores.” The report’s objection to it was accuracy: “it also provides far less effective risk prediction.”

Corrected 2026-10-01. This record said of both kinds of alternative model, “The score gap did not close.” The discounted model narrowed it. The record’s opening line also said the study was ordered “to determine whether credit-based insurance scores act as a proxy for race”; it now gives the Commission’s reading of the mandate, and two section labels that argued (“What it concluded anyway,” “The sentence that undoes the defense”) now describe.

Retrieval note. ftc.gov returns HTTP 403 to automated fetch tools on every path, including the report landing page. It yields to curl with an ordinary browser User-Agent. Because this document has now defeated multiple research passes, the full 242-page PDF is preserved in this repository at reference/docket/sources/FTC_2007_credit-based-insurance-scores.pdf. No future session should have to re-fight the 403.

Correction on the record. Secondary sources, including the FTC’s own press release, render the racial finding as: “the use of scores is likely to increase the amount they pay for automobile insurance.” That sentence does not appear in the report body. Quote the Conclusion above, not the press release.