St. Thomas Law Review

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This comment argues that using socioeconomic data to calculate auto insurance premiums within the boundaries of a single ZIP Code disproportionally increase premiums on low-income households, leading to higher rates of uninsured drivers in these communities. Furthermore, this comment discusses how this rate scheme provides a possible avenue to illegally discriminate based on race, as a direct result of historical racial segregation and recent advances in big data. Part II.A of this comment discusses the recent amendment to the insurance laws of Florida that now allows the use of a single ZIP Code to calculate auto insurance rates. Part II.B provides a short history of the evolving methods of racial segregation in Florida. This section also asserts that the legislature failed to take into account the geographical correlation between ZIP Code boundary lines and the perpetuating and constricted racial composition of neighborhoods in Florida. Part II.C discusses the latest advances and capabilities of big data. It also presents the ever-advancing capacity of big data to collect and forecast personal behavior. Part III.A discusses the experience rating system and the areas of moral hazard and adverse selection. Part III.B discusses the impact of high premiums on the cost of vehicle ownership and its impact on socioeconomic mobility." Part III.C presents a comparative analysis to understand the actual effectiveness of progressive criminal punishment for uninsured drivers. Finally, Part IV argues that Florida should follow the lead of California and prohibit the use of single ZIP Codes and socioeconomic factors in rate calculations. Additionally, it proposes the establishment of a reimbursement system for consumer intervenors in rate-making decisions as possible solutions that can reduce premiums, and lead to lower rates of uninsured drivers and more vehicle ownership in low income households.