Insurance watchdog slams industry for rising costs, unfair pricing
Consumer advocate says insurers exploit mandates, credit scores, and climate change to boost profits
The Consumer Federation of America says state regulators are failing to rein in skyrocketing insurance premiums.
Companies base prices on irrelevant personal factors like credit scores and marital status, driving inequity.
Climate change and corporate fossil fuel investments are worsening risks while consumers foot the bill.
Car insurance costs and big profits
Most Americans are legally required to buy insurance, but few enjoy the experience — and for good reason, says Michael DeLong of the Consumer Federation of America (CFA). In a recent blog post, DeLong called out state regulators for failing to protect consumers as premiums surge far faster than inflation.
Despite near-universal auto insurance mandates, regulators “don’t reject excessive premium increases, don’t aggressively fight unfair discrimination, and don’t hold insurance companies accountable,” he wrote. DeLong said some states maintain strong consumer protection programs, but others have grown “far too cozy” with insurers or adopted a hands-off approach that leaves drivers with little recourse.
Prices based on questionable factors
CFA research shows that drivers are often penalized for things unrelated to how safely they drive. Insurers set rates using socioeconomic markers such as ZIP code, education, marital status, and even job title.
Consumers with poor credit scores pay on average 115% more for auto insurance than those with excellent credit, the federation found. “A consumer can pay one penalty because of their blue-collar job, another because they didn’t go to college, a third because they are single,” DeLong wrote — and the biggest penalty usually comes from a low credit score.
Homeowners insurance becoming unaffordable
Homeowners are also being squeezed. CFA’s latest data show that between 2021 and 2024, average homeowners insurance premiums jumped 24% — or $648 per household, a $21 billion increase nationwide. Premiums rose in 95% of ZIP codes, leaving some homeowners to drop coverage entirely.
As with auto policies, credit score disparities widen the gap: homeowners with poor credit pay about twice as much as those with excellent credit for identical coverage.
Discounts for prevention rarely materialize
While homeowners who strengthen their roofs, use fire-resistant materials, or otherwise reduce risk should see lower premiums, DeLong said insurers rarely pass along savings voluntarily. Some states offer grants of around $10,000 for home-hardening projects, but many programs are underfunded.
“You can’t trust insurance companies to return savings to customers without oversight,” DeLong warned.
Climate change and corporate hypocrisy
Insurance costs are also climbing as stronger storms, wildfires, and floods produce more frequent claims. Yet many insurers still underwrite and invest in fossil fuel projects — effectively profiting from the industries driving climate change.
“Companies are making the crisis worse,” DeLong wrote, “and then passing the cost of increased risk to their policyholders.”
Growing pressure for reform
Rising premiums and insurer pullouts are drawing political attention, giving consumer advocates hope for reform. “Consumers face huge problems in getting affordable and available insurance policies,” DeLong said.
The CFA continues to push for stricter oversight, fairer pricing, and tougher enforcement. Or, as DeLong concludes with a nod to The Lorax: “Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not.”