Root’s broken promise
On August 6, 2020, Root Insurance announced its commitment to “drop the score” by eliminating credit scores from its car insurance pricing by 2025. In a post titled “We’re Dropping Credit Score From Car Insurance Pricing by 2025. Here’s Why,“ Root highlighted its mission to make car insurance fairer by basing rates on actual driving behavior, unlike traditional insurers. Root emphasized that relying on credit scores disproportionately harms individuals who have faced systemic discrimination, perpetuating inherent bias and systemic inequities. “We’re announcing our commitment to removing credit scoring from our pricing model,” it wrote.
Recent filings in Nevada and North Carolina reveal that Root continues to incorporate credit scores into its pricing model, contradicting its earlier commitment to eliminate credit scoring by 2025.
A Nevada filing this year, seeking approval for an 8.2% rate increase affecting fewer than 4,000 policyholders, confirms Root’s continued use of the TransUnion TrueRisk Standard Auto model to assign financial responsibility tiers based on credit scores.
Specifically, credit reports are ordered for the Primary Named Insured and can be reused for up to 90 days. Financial Responsibility Tiers, which determine premium levels, are assigned based on the credit score and remain unchanged for renewal terms unless recalculated. Root proactively reorders credit information, recalculates insurance scores, and reevaluates financial responsibility tiers every 36 months. Additionally, the insured or their authorized agent can request a credit review once every 12 months. If the updated score qualifies for a better tier, the insured will be reassigned; however, if the score results in a worse tier, the current tier remains unchanged.
Separately, Root filed to launch its auto program in North Carolina earlier this month. The filing includes plans to use TransUnion’s CreditVision product to evaluate customers’ credit history as part of the rating process, mirroring its Nevada approach.
