Two new papers from property casualty actuaries delve into issues of historical and ongoing bias in insurance pricing.
These papers are on potential Influences among four rating factors and attempts to actually define discrimination in insurance.
Factors such as geography, credit scoring, home ownership, and motor vehicle records affect homeowners and auto insurance rates and can cause Black consumers to pay higher premiums.
Actuaries and regulators are trying to untangle factors from societal prejudice for fairer pricing
AI or machine learning can augment or amplify these biases with their vast inputs, and data scientists will be analyzing outcomes for discriminatory pricing effects.
States have been taking action through regulation or pending legislation to extinguish some factors that can lead to racial bias or to examine data modeling to check for discriminatory effects.
Author(s): ELIZABETH FESTA
Publication Date: 5 April 2022
Publication Site: Investopedia