NBER Study: Low-Credit Homeowners Pay $550 More Annually for Insurance, Fueling Reform Debate

Homeowners with the lowest credit scores pay approximately $550 more per year—or 24% more—for identical coverage compared to those with the highest scores, according to a 2026 National Bureau of Economic Research working paper analyzing over 70 million policies. The finding, published June 2, 2026, quantifies a longstanding pricing disparity that could intensify regulatory and legislative scrutiny of credit-based insurance scoring. The study underscores how insurers’ reliance on credit profiles creates significant premium gaps, even when property characteristics are similar. This may pressure carriers such as State Farm, Allstate, and Progressive to adjust pricing models or face mandates to limit credit-score use, potentially compressing underwriting margins in homeowners lines. The data arrives as several states reconsider the practice, raising the prospect of repricing risk for the $100 billion-plus U.S. homeowners insurance market. For investors, the report highlights both a potential headwind for insurers heavily dependent on credit-based pricing and an opportunity for companies with advanced, non-credit risk-assessment tools to gain competitive advantage if reforms advance.