Research shows that people of color disproportionately pay *70-80% more* than other populations due to their credit score. 

While credit score is a factor in pricing auto insurance in most states, this is sadly a one-way street: the payment history of an insured is not reported back to the credit bureau. This means people who pay on time are not receiving the benefit of an improved credit score even if they’ve made years of timely payments. 

Charles Morgan knows this personally. As the Co-Founder of ScreeCred, he is on a mission to create pathways for marginalized communities to gain access to credit by tracking and reporting their auto insurance premium.  

“I remember a time when I had to decide between feeding my family and car insurance,” Morgan recalls. When he was pulled over, a member of law enforcement let Morgan off with a warning. This moment was an epiphany for Morgan, who has been on a quest to right-side this imbalanced practice ever since.

Without the benefit of reporting positive credit history from auto insurance back to the credit unions, the practice becomes punitive and can be lifelong. 

The Urban Institute found that “Black and Hispanic communities are also more likely to have their credit scores decline as they age, according to the nonprofit research organization. Between 2010 and 2021, 32.9% of 18- to 29-year-olds in majority Black communities saw their credit scores decline, while 26.2% of those in majority Hispanic and 21% of those in majority white communities saw their scores go down.”

How does ScreeCred address this? 

Wheels are in motion on a number of solutions. First and foremost comes enabling consumers to self-report their auto insurance payments the same way they can self-report their rent, utility payments, and cell phone bills. Morgan has engaged in a dialogue with leaders in the credit scoring space, and technology already exists that is assisting consumers with easy self-reporting. Equifax, Experian, and Transunion currently allow individuals to link their bank accounts to the credit bureaus so that they can self-select which bills to have imported into their credit history. This level of access is exactly what Morgan has envisioned from the get go. Before he began these conversations, auto insurance was not included in the self-reporting functionality. 

But how to get the insurance industry on board? 

Morgan has been met with support, with one carrier calling the idea “genius.” He recently shared an update on progress with Insurance Nerds and Tony Cañas on the Profiles in Risk podcast. He’s still looking for someone to pilot with, with a goal of creating new actuarial models to price non-standard auto policies through the aggregation of data. Amongst insurers and insurtechs specifically, this data would be a tremendous asset for two core reasons:

1. Morgan believes there will be a substantial decrease in customer turnover as the credit invisible and people with poor credit have the chance to improve their creditworthiness through timely premium payment. 
2. While models exist for the standard auto market, there aren’t specific technical pricing models dedicated to what carriers perceive as higher risk auto accounts. This data would allow ScreeCred and any partners to change this. 

To bring ScreeCred’s vision to life, change beyond a slow-to-evolve insurance industry is needed. 

“For an industry in a pivotal moment, the type of innovation that Charles and ScreeCred are creating is setting the pace for others to follow,” says Elisa Stampf, Co-Founder and CEO of Insure Equality. “As we look at the landscape and the road ahead, the amount of open positions, the lack of diversity in leadership, and so much more, creative thinking and problem solving are necessary to take this industry forward.” 

Here’s where insurtech comes in

As an insurtech, ScreeCred must also secure interest from investors, and that comes with an ironic challenge. “In 2022, just 1% of all venture capital funding went to Black-founded companies—an estimated $2.3 billion of a total $215.9 billion,” per Fast Company (female founders have it only slightly better at at 1.9%… and women of color have it worse). 

The same systemic hurdles that make it difficult for people of color to find credit plays a factor in securing investment funding—even for billion-dollar ideas. Crunchbase reported  that Nigerian-born Unicorn founder Wemimo Abbey was “was rejected 326 times by investors prior to its 2022 funding that valued the company at a billion dollars.”  

Esusu is a fintech startup that helps renters build credit with on-time payment reporting. According to Esusu, investors who passed over the company did not believe in ‘this idea of investing in low- to medium-income households and helping them get quality financial access to products.”

There is hope that ScreeCred will not meet the same fate. Morgan brings a fundamental understanding of how meaningful change in the insurance industry doesn’t always proceed at a break-neck pace. He’s not hoping for that. He’s hoping for a lasting impact that boosts the financial literacy of a core segment of insurance buyers for whom the deck has been unfairly stacked before their relationship with insurance ever began. Folding these policyholders into a positive relationship with insurance is in the best interest of an industry that will see 50% of its talent retire in the next 10-15 years.

Insurance DEI not a choice, but an obligation

Through communities like Insure Equality, Morgan has forged meaningful connections and introductions to potential partners who similarly value an equitable insurance market for all. “It behooves our industry to look to Charles to both create pathways for change, and acknowledge the history of our industry so that we can do better for all of our stakeholders,” says Stampf. Morgan sees progress on the horizon.“People are doing the work in almost a grassroots way, through holding each other and their networks accountable. It’s uplifting to see,” he says. 

Brett Carter, MBA, who specializes in insurance executive search and serves as an independent member of the board for Ascentra Credit Union, sees strong potential for ScreeCred. “I feel strongly that insurtech can not only combat systemic racism in the insurance industry, but rather it has an obligation to,” he says. “What Charles and ScreeCred endeavor to do is an absolute gamechanger, and will positively impact millions of insureds who have been left at the margins of insurance underwriting and data analytics. When looked at from that perspective, how could you not want to help support the effort.”

An end to inequitable practices

Precious Norman-Walton, CPCU, of the National African American Insurance Association, stresses that “when sufficient insurance coverage becomes more difficult to access and afford, underserved populations will forgo valuable coverage, which is crucial to build generational wealth and protect financial assets.” This, she notes, sets into motion the cause and effect cycle of poor credit scores, higher insurance rates, and a reduced resiliency for vulnerable communities.  

“Through embracing solutions, and supporting thought leaders like Charles Morgan who are tackling these issues, the Insurance Industry can—and will—find equitable solutions,” says Norman. “After all, we owe a duty and responsibility to deliver the promise of access to and protection to all who desire it.”

With groundwork already laid—tying something imminently doable, like getting the credit bureaus on board using their existing infrastructure and resources—the big picture for ScreeCred much clearer. There’s anticipation in the air around ScreeCred, and it feels like possibility. “It will take one partner to pave the path,” says Morgan. “The rest will someday follow.”