Why did Thompsons decide to do the 2016 study on postcodes and premiums?

Tom Jones, Head of Policy at Thompsons Solicitors: Thompsons Solicitors has been investigating the lack of transparency in the insurance market for a number of years. Thompsons commissioned this report as we feared – following an initial review of the available data – that direct or indirect discrimination might be taking place. We are the UK’s largest campaigning law firm and only act on behalf of claimants, if we are to help claimants and consumers longer term we see it as appropriate that we should explore these kind of issues. The report confirmed our fears that the process by which car insurers calculate premiums produces a skewed result.

How was the ethnic penalty report conducted?

The report was conducted by Webber Phillips, a research company, using data provided by the AA for all 125 postcode areas in the UK. The report found that people who live in multi-ethnic districts pay an ‘ethnic penalty’ in higher-than-average motor premiums of up to £458.

If someone is using datasets to calculate risk and prices, and there is the possibility that these datasets are biased against a minority, then what should their responsibilities be?

They should at least be willing to look into the outcomes rather than simply ‘bat it away’ as happened when this report was published!  The ‘ethnic penalty’ report acknowledged that the data used was limited and suggested that a more in depth, independent research was completed. However the insurers refused to provide access and appear – from our perspective - to hope the whole thing will just ‘go away’.

If there is discrimination, how can the insurer at fault tackle it?

Insurance companies urgently need to examine their procedures to ensure new processes are put in place that eliminate the risk of discrimination. And they need to start to be more transparent. Motor insurance is compulsory (as for that matter is effectively buildings insurance for anyone with a mortgage) and in the same way that political parties have focussed on the charges made and terms offered by domestic energy suppliers so the focus could turn on insurers and in the absence of greater transparency we believe that would be a good thing. 

If someone fails to address discrimination, what steps can be taken by outside agents. Who does this – is it lawyers, the government, someone else?

Lawyers should be the last resort! If the industry wont sort itself out in a transparent way then the government should intervene.  They should have addressed the issue back in 2016 by enforcing far stricter regulation on the insurance industry, but instead they appear to be intent on handing more power to the insurers, one example being the proposed Civil Liability Bill which will remove the right to free or affordable legal representation for hundreds of thousands of consumers.

We submitted the report to the FCA but did not receive any response, and we also 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.


Insurance companies urgently need to examine their procedures to ensure new processes are put in place that eliminate the risk of discrimination. They need to start to be more transparent.

Tom Jones Head of Policy

What steps can be taken if it is not just one company using discriminatory methods, but an entire industry?

Industry bodies, in this case, the Association of British Insurers, should take responsibility for the activities of their members. Unfortunately on the evidence to date the ABI appear unwilling to investigate, explain how they set prices or provide additional data to independently verify that their systems aren’t discriminatory. 

Have you been involved in any cases or action against insurers in the past over equality and discrimination? Or are you aware of any?

We haven’t, yet, and if the industry gets its act together has nothing to hide and becomes more transparent they need not fear any either.