Last week, the Financial Conduct Authority launched a probe into the insurance industry, partly looking into whether insurers “discriminate” against some minorities.
Our research found insurers tend to charge British-born drivers more for their insurance than drivers who only moved to the UK as adults.
Most insurers charge higher premiums if a driver holds a foreign licence or has not held a UK licence for long.
But foreign-born drivers who have held a full UK licence for 10 years are typically charged an average of £62 less than a British-born driver who has held their licence for the same amount of time.
Consumer rights expert Martyn James said: “Insurance companies often hide behind 'confidentiality' when talking about their premiums.
“But if the evidence shows drivers are being penalised because of British birth certificates then they need to explain what it is that's costing more and correct it if it's wrong.”
BRITS GET CHARGED MORE
Cheapest quotes for our British-born driver:
£822.08 – Admiral Little Box
£996.80 – Admiral
£1,006.88 – Diamond
£780.69 – Admiral Little Box
£958.72 – Admiral
£973.28 – Diamond
Cheapest quotes for our identical but foreign-born driver:
£775.04 – Admiral Little Box
£906.68 – Admiral
£912.80 – Diamond
£763.84 – Admiral Little Box
£902.72 – Admiral
£902.72 – Diamond
The Sun also discovered a couple of insurers were charging drivers more if they had a non-British name or were foreign-born, raising concerns about discrimination.
Mr James added: “Insurers have emphatically denied that they're using potentially racist criteria for setting insurance premiums, but the Sun's investigation suggests otherwise.
“If there's nothing to hide here, then the insurers need to demonstrate why premiums have increased – or admit there's a problem.”
The Sun used two comparison sites to compare quotes for a 32-year-old dad of two, working as a builder and living in Brighton.
He drove a Vauxhall Astra and had held a full UK driving licence for 10 years.
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We used exactly the same details for each quote, including the same email address, because previous investigations have found insurers sometimes provide different quotes based on people's email addresses.
We changed only whether the driver had been born in the UK or had moved here in 2007, when he was 20. We then changed his name to see if this affected what he was quoted.
When we said the man had lived in the UK since birth, his three cheapest quotes for car insurance from both comparison sites averaged £923.07.
But when we said the same man had first moved to the UK in 2007, his average cheapest quote dropped to £860.63 – around £62 cheaper.
Both his three cheapest quotes and most quotes overall were lower across both comparison sites.
Despite this, a few insurers charged more if the driver wasn’t born in the UK – or if he had a typically non-British name.
How Hastings charged Mohammed more than Paul
Hastings Essential quoted* our driver with otherwise identical details:
– £1,450.14 when he was called Paul Johnson and born in the UK
– £1,450.14 when called Mohammed Hussain and born in the UK
– £1,471.19 when called Paul Johnson and born abroad but moved to the UK in 2007
– £1,493.08 when called Mohammed Hussain and born abroad but moved to the UK in 2007
*Quotes from MoneySuperMarket.com on 06/11/18. The driver had held a full UK driving licence for 10 years in all examples.
Using MoneySuperMarket, the man was quoted £1,450.14 for his annual premium with Hastings Essential if his name was Paul Johnson and he was born in the UK.
When we kept all of Paul Johnson’s details the same but said he had first moved to the UK in 2007, the premium quote went up by £21.05 to £1,471.19.
And when we kept all other details the same but changed the man’s name to Mohammed Hussain, his premium went up again by another £21.89 to £1,493.08.
The names Kim Wong, Dayo Adeyemo and Hardeep Singh were also all quoted the higher price. But changing the driver’s name back to Paul Johnson made the price drop again.
Using ComparetheMarket, two insurers quoted foreign-born drivers more but none added extra when their name was changed.
Hastings Essential charged the man £1,495.20 if he was born in the UK but an extra £41.32 – a total of £1,536.52 – if he had only moved to the country in 2007.
While MoreTh>n charged the man £1,579.67 if he was UK-born and an extra £5.97 – a total of £1,585.64 – if he had moved here in 2007.
Both Hastings and MoreTh>n insisted they did not change prices depending on drivers’ names or place of birth.
A spokesperson from Hastings said that it does change insurance prices based on the length of time a person has been permanently resident in the UK, as this is an industry standard.
It also has "complex and dynamic" pricing systems.
A spokesman for RSA Group, which owns MoreTh>n, said that it does not set rates based on place of birth or UK residency – but added that prices can fluctuate.
MoneySuperMarket and Comparethemarket.com both said that insurance firms calculate prices based on their own underwriting criteria.
A spokesman from MoneySuperMarket added: “The price an individual pays will reflect a broad range of ‘risk’ factors, primarily their age, car, driving history and where they live, along with other details.
"If an insurer’s records suggest a particular characteristic is associated with an increased likelihood of a claim being made, then a driver with that characteristic will be charged more.”
And Dan Hutson, head of motor insurance at ComparetheMarket said: “Comparethemarket.com expects all insurance partners to only use data in line with legal and regulatory requirements including those relating to anti-discrimination legislation.”
Last year, The Sun also revealed how some insurers charge customers up to £1,000 more if their name is Mohammed.
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