Campaigning law firm Thompsons Solicitors has submitted findings that strongly link high car insurance premiums to ethnicity to the Equality and Human Rights Commission (EHRC) after the government indicated it would not take any action on the issue.

The study conducted by data analysts WebberPhillips, using data from the AA covering over 125 postcodes, was published and submitted to government ministers and the Association of British Insurers (ABI) in August but neither was willing to investigate the issue.

Thompsons is now asking the ECHR to intervene and insisting potential indirect discrimination cannot be ignored any longer in the light of government claims that possible ‘savings’ from reforms to personal injury claims will be passed on to consumers.

“The government has a statutory duty to consider the race impact of its reforms and has admitted it doesn’t have any data - but then turns its nose up at a robust piece of research by reputable experts that shows there is a problem,” said Tom Jones, Head of Policy at Thompsons Solicitors.

“Our report is unequivocal in saying that the process of premium setting has definitely produced an inequality of outcome to the detriment of black and ethnic minority groups.

“We are not saying this is deliberate, but the insurers have serious questions to answer about the way they calculate premiums and the government has a legal obligation to demonstrate that any savings from small claims reforms will not only be passed on but will be passed on fairly without any racial bias.”

The WebberPhillips research found that people who live in multi-ethnic districts pay an ‘ethnic penalty’ in higher-than-average motor premiums of up to £458.

Their report says there is a ‘strong statistical relationship’ – accounting for 60% of the variation - between ethnic minority prevalence and higher insurance premiums in a postcode. The additional cost affects an estimated 12 million people – more than one in five UK residents - regardless of the driver’s own ethnic origin.

WebberPhillips concluded that the variations cannot be accounted for by prevalence of crime, or fear of crime, available claims data or relative affluence.

In August 2016, Thompsons Solicitors invited the ABI and major car insurers to discuss the findings. The ABI denied there was a problem and refused to meet. A separate survey by Which? subsequently found further evidence of discrimination.

Several MPs including Virendra Sharma, Keith Vaz and Shabana Mahmood publicly expressed concerns over the findings. When asked in Parliament, the government said ‘insurers are not able to use a person’s race as a factor in assessing risk and charging for their products’ but did not indicate it would take any action, but suggested that the organisation who should be looking into this was the Financial Conduct Authority (FCA).

Thompsons Solicitors has submitted the report to the FCA but have not received any response. Thompsons has now referred the information to the EHRC. The Commission has the power to intervene in or institute legal proceedings, and can apply for an injunction if a service provider is likely to commit an act that is prohibited by the Equality Act 2010.

“We have submitted the findings to the EHRC because the government, the FCA and the ABI appear unwilling to investigate them, explain how they set prices or provide additional data to independently verify that their systems aren’t discriminatory,” continued Mr. Jones.

“If their system of price-setting produces an inequality of outcome for people of certain ethnic backgrounds– i.e. they are financially worse off – then they’ve broken the law. Air BnB has faced similar suggestions in the U.S. that their system have allowed racial discrimination to occur.

“We hope that the EHRC will take action to ensure that all motorists are treated equally and no one is subjected to an ‘ethnic penalty’.”