“White Privilege” in Auto Insurance

[VolAgent]

For most of the country, if you discriminate via economic status you can and are discriminating via race.

Living in a minority majority city, and one that is economically challenged compared to most of its peers I am of two thoughts on this. On one hand, it seems so many policies are designed to keep the poor poor. On the other hand, I see many CLUE reports with tons of silly towing claims. To the point I wonder, are they running out of gas and calling a tow truck to get back home? Also, I work strictly over the phone, so I have no real idea what anyone's race is. I can assume based on factors, which an insurance company could use as well if not better, but ultimately it is just an assumption. Also I don't really track it, it is what I remember. All that said, it does seem people I would guess to be non-white have worse driving records.

I recall seeing a study last year, and maybe that is what this article is based upon. It claimed it adjusted for driving record and still found that minorities paid more for car insurance.

 

[leevena]

Volagent stated...For most of the country, if you discriminate via economic status you can and are discriminating via race

While most of what you stated appears responsible to me, your comment above does not. How can you discriminate via race when all races are found in the lower end of the economic scale?

 

[VolAgent]

Volagent stated...For most of the country, if you discriminate via economic status you can and are discriminating via race

While most of what you stated appears responsible to me, your comment above does not. How can you discriminate via race when all races are found in the lower end of the economic scale?

Yes, that is true. There are poor people of every race. But in many larger cities, Memphis in particular, both are highly correlated. My original statement is probably a bit too broad, but there is a strong correlation in most areas. Judging by these two maps, Appalachian would be the biggest outlier.

Small Area Income and Poverty Estimates - Interactive Data and Mapping - U.S. Census Bureau

U.S. Racial Diversity by County

 

[vic120]

I don't believe for one minute that an Insurance company cares to discriminate based on race for race's sake nor discriminate the poor for the economic status sake

They care about the bottom line and use true statistics to come to that bottom line, If a race or an economic lever is getting higher rates its because the statistics show they are higher risk based on facts and statistics

I can't believe this is even a discussion

 

[InsCommentary]

Big Bad Voodoo Data | Insurance Commentary with Bill Wilson

 

[InsCommentary]

If a race or an economic lever is getting higher rates its because the statistics show they are higher risk based on facts and statistics

I can't believe this is even a discussion

It's illegal to base pricing on race. I can't believe that's even a discussion. It's legal for rates to be discriminatory but only if they are fairly discriminatory. Charging insurance premiums based on race is unfairly discriminatory. The question is, what other factors are or should be unfairly discriminatory? Some states explicitly require that rates be risk based. Price optimization, as one example, bases premiums on how much the insurer can charge before an insured will take their business elsewhere. So, two individuals, families or businesses with exactly the same actuarially-determined risk exposure might pay a premium difference of hundreds or thousands of dollars. Every state regulator that has considered this issue has ruled that such pricing is not permitted in their state.

Then you have real situations like this...an elderly lady's husband dies and she changes her home and auto insurance to just her name. After doing so, she gets an invoice for additional premium. The carrier says that they can demonstrate statistically that she is more likely to file a claim as a widow than as a married woman. Pure actuarial science. But is that "fair," especially considering the "human" part of the story of a woman how just lost a husband? These are issues that we need to consider and that are likely to be addressed legislatively or regulatorily. I wrote about this here:

The New Way to Do Insurance | Insurance Commentary with Bill Wilson

Aside from the social, moral or ethical issue of "fairness," there is also a PR price to be paid. How would consumers view an insurer who engages in this practice?

 

[vic120]

It's illegal to base pricing on race. I can't believe that's even a discussion. It's legal for rates to be discriminatory but only if they are fairly discriminatory. Charging insurance premiums based on race is unfairly discriminatory. The question is, what other factors are or should be unfairly discriminatory? Some states explicitly require that rates be risk based. Price optimization, as one example, bases premiums on how much the insurer can charge before an insured will take their business elsewhere. So, two individuals, families or businesses with exactly the same actuarially-determined risk exposure might pay a premium difference of hundreds or thousands of dollars. Every state regulator that has considered this issue has ruled that such pricing is not permitted in their state.

Then you have real situations like this...an elderly lady's husband dies and she changes her home and auto insurance to just her name. After doing so, she gets an invoice for additional premium. The carrier says that they can demonstrate statistically that she is more likely to file a claim as a widow than as a married woman. Pure actuarial science. But is that "fair," especially considering the "human" part of the story of a woman how just lost a husband? These are issues that we need to consider and that are likely to be addressed legislatively or regulatorily. I wrote about this here:

The New Way to Do Insurance | Insurance Commentary with Bill Wilson

Aside from the social, moral or ethical issue of "fairness," there is also a PR price to be paid. How would consumers view an insurer who engages in this practice?

I don't get it, In the case of the Lady who lost her husb Is it Nice, NO, Just like with Medicare Supplement Spouse dies and they lose HH discount with some companies, def NOT nice

But we are not talking about nice, If the risk statistics show higher risk as a widow than that's what it show's and that is the reason for the adjustment

These type of is it biased arguments play on emotion rather than facts

 

[InsCommentary]

These type of is it biased arguments play on emotion rather than facts

I'd look at it as a matter of human decency and within the overriding industry doctrine of "utmost good faith." If a charge is in order, assess it at renewal, not within the current contracted period. I'm publishing a book in May on resolving insurance coverage and claims disputes. In it, I tell a story from the insurer side:

"An independent insurance agent in a small rural town insured a farmer whose barn burned down. The agent had failed to identify the farm structure, so the farm policy did not cover the $5,000 total loss. The agent placed farm business with five different insurers his agency represented. The local manager of the insurer on the loss called the local managers of the other four farm insurers and they all agreed to each share $1,000 of the loss “so their agent would not be embarrassed in his community.”

"This actual claim took place in 1956. If it happened today, do you think this would be how the claim was resolved? This is why you need this book. Let’s begin…."​

This is the human side of the industry that we are losing with the increasing devotion to, and worship of, "big data." We exist to assist individuals, families and organizations in identifying their exposures to catastrophic or serious loss and insuring or risk managing them. "Emotion," along with empathy and decency, are inherent in that charge.

 

[VolAgent]

I'd look at it as a matter of human decency and within the overriding industry doctrine of "utmost good faith." If a charge is in order, assess it at renewal, not within the current contracted period. I'm publishing a book in May on resolving insurance coverage and claims disputes. In it, I tell a story from the insurer side:

"An independent insurance agent in a small rural town insured a farmer whose barn burned down. The agent had failed to identify the farm structure, so the farm policy did not cover the $5,000 total loss. The agent placed farm business with five different insurers his agency represented. The local manager of the insurer on the loss called the local managers of the other four farm insurers and they all agreed to each share $1,000 of the loss “so their agent would not be embarrassed in his community.”

"This actual claim took place in 1956. If it happened today, do you think this would be how the claim was resolved? This is why you need this book. Let’s begin…."​

This is the human side of the industry that we are losing with the increasing devotion to, and worship of, "big data." We exist to assist individuals, families and organizations in identifying their exposures to catastrophic or serious loss and insuring or risk managing them. "Emotion," along with empathy and decency, are inherent in that charge.

The way things should be done, presumably he was a good agent and a good representative of the companies. The best case scenario now would be the carrier paying and then filing against the agent's E&O.

 

[vic120]

I'd look at it as a matter of human decency and within the overriding industry doctrine of "utmost good faith." If a charge is in order, assess it at renewal, not within the current contracted period. I'm publishing a book in May on resolving insurance coverage and claims disputes. In it, I tell a story from the insurer side:

"An independent insurance agent in a small rural town insured a farmer whose barn burned down. The agent had failed to identify the farm structure, so the farm policy did not cover the $5,000 total loss. The agent placed farm business with five different insurers his agency represented. The local manager of the insurer on the loss called the local managers of the other four farm insurers and they all agreed to each share $1,000 of the loss “so their agent would not be embarrassed in his community.”

"This actual claim took place in 1956. If it happened today, do you think this would be how the claim was resolved? This is why you need this book. Let’s begin…."​

This is the human side of the industry that we are losing with the increasing devotion to, and worship of, "big data." We exist to assist individuals, families and organizations in identifying their exposures to catastrophic or serious loss and insuring or risk managing them. "Emotion," along with empathy and decency, are inherent in that charge.

I don't know, Ins companies as far as I have dealt with are black and white,
It is what it is, As an agent, I try to do best by clients

Regardless we can talk all day wouldn't it be nice if every person had a home and good food every day full medical without breaking the bank.

I mean is it fair guy worked for 20 years at a company then gets downsized loses his home and cant feed his family

it is what it is though, the only supposed solutions I've heard is to take from someone else to give to another

The same thing with auto, for instance, Ok in bad neighborhoods there is more theft & accident and it cost more, So people want to say its discrimination (it's not) they want lower rates in these neighborhoods

Ok so how will that work, Others in lower risk pool will need to pay more to offset those costs.

Now is this right is this fair, is this human decency,

Since Obama care I pay more for insurance and with much higher deductibles I pay so much more, and no I'm not rich I cant afford it.

Was that fair was that human decency?