Reform postcode pricing or government could step in, Straw warns

Jack Straw

Former Justice Secretary Jack Straw has warned insurers may lose their right to underwrite motor if they continue to use postcode redlining.

Straw warned insurers that ‘parliament could take motor insurance out of the private sector.’

He said insurers were unfairly hiking motor premiums for his own constituents in Blackburn, which has some of the poorest neighbourhoods in north west England.

“My point is that the postcode is a very inadequate and crude surrogate for the pricing of this risk,” Straw told a Brokerbility audience at a conference in Leicester yesterday.

“It’s an easy one for the industry, because the data is available, but it’s wrong, and it has very serious social consequences if people are priced out of insurance.”

Straw said that postcode redlining – in which underwriters ban or increase premiums on a person’s postcode -  also aggravated racial tension in his constituency, where many believed that the practice unfairly hiked up premiums in areas with a large proportion of Pakistani inhabitants.

“That’s the perception,” he said. “If this goes on, it exacerbates racial divisions in the town.”

Straw has proved a powerful influence on government, having successfully lobbied for a ban on referral fees.