Consumer Watchdog Calls on Insurance Commissioner Lara to Reject Allstate’s Job-Based Insurance Rate Discrimination, Adopt Regulations to Stop the Practice Industrywide

Link: https://www.prnewswire.com/news-releases/consumer-watchdog-calls-on-insurance-commissioner-lara-to-reject-allstates-job-based-insurance-rate-discrimination-adopt-regulations-to-stop-the-practice-industrywide-301631577.html

Additional: https://consumerwatchdog.org/sites/default/files/2022-09/2022-09-22%20Ltr%20to%20Commissioner%20re%20Allstate%20Auto%20Rate%20Application%20w%20Exhibits.pdf

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Insurance Commissioner Ricardo Lara should reject Allstate’s proposed $165 million auto insurance rate hike and its two-tiered job- and education-based discriminatory rating system, wrote Consumer Watchdog in a letter sent to the Commissioner today. The group called on the Commissioner to adopt regulations to require all insurance companies industrywide to rate Californians fairly, regardless of their job or education levels, as he promised to do nearly three years ago. Additionally, the group urged the Commissioner to notice a public hearing to determine the additional amounts Allstate owes its customers for premium overcharges during the COVID-19 pandemic, when most Californians were driving less.

Overall, the rate hike will impact over 900,000 Allstate policyholders, who face an average $167 annual premium increase.

Under Allstate’s proposed job-based rating plan, low-income workers such as custodians, construction workers, and grocery clerks will pay higher premiums than drivers in the company’s preferred “professional” occupations, including engineers with a college degree, who get an arbitrary 4% rate reduction.

Author(s): Consumer Watchdog

Publication Date: 22 Sept 2022

Publication Site: PRNewswire

Dot Plot Show Fed Anticipates More Hikes in 2023 to 4.50 Percent

Link: https://mishtalk.com/economics/dot-plot-show-fed-anticipates-more-hikes-in-2023-to-4-50-percent

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Hikes Come Hell or High Water? 

  • The Fed participants have a median expectation of 4.25 to 4.50 percent for the end of 2022
  • That’s another 1.25 percentage points more this year.
  • The Fed then anticipates one more hike in 2023 to 4.50 to 4.75 percent.

I have to admit that a year ago I did not foresee this. But here we are. 

The key question is not where we’ve been but where we are headed. I Highly doubt the Fed hikes another 1.25 percentage points this year or gets anywhere close to 4.50 to 4.75 percent in 2023.

Author(s): Mike Shedlock

Publication Date: 21 Sept 2022

Publication Site: Mish Talk

Covid Still Kills, but the Demographics of Its Victims Are Shifting

Link: https://khn.org/news/article/covid-still-kills-but-the-demographics-of-its-victims-are-shifting/

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Californians age 75 and older made up 53% of covid deaths through July in 2022, up from 46% in 2020 and 2021. Only about 6% of the state’s residents are 75 and older. And white Californians 75 and older outnumber Latinos in that age group about 3 to 1.

In the initial vaccination rollout, California prioritized seniors, first responders, and other essential workers, and for several months in 2021 older residents were much more likely to be vaccinated than younger Californians.

“Now, the vaccination rates have caught up pretty much with everybody except for kids, people under 18,” Brewer said. “You’re seeing it go back to what we saw before, which is that age remains the most important risk factor for death.”

Author(s): Phillip Reese

Publication Date: SEPTEMBER 21, 2022

Publication Site: KFF

Two-Year Treasury Yield Highest Since 2007, Everything Inverted Over 1 Year

Link: https://mishtalk.com/economics/two-year-treasury-yield-highest-since-2007-everything-inverted-over-1-year

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The curve has been inverted in places for over a year. This is a recession signal and I believe the economy went into recession in May. 

The Fed is merrily hiking away and is likely to keep doing so until it breaks something big time. The Fed will hike 75 basis points tomorrow and the market thinks another 75 basis points is coming in November. 

If so, it is doubtful the markets will like it much. 

Author(s): Mike Shedlock

Publication Date: 20 Sept 2022

Publication Site: Mish Talk

Daily Treasury Par Yield Curve Rates

Link: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2022

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Treasury Par Yield Curve Rates: These rates are commonly referred to as “Constant Maturity Treasury” rates, or CMTs. Yields are interpolated by the Treasury from the daily par yield curve. This curve, which relates the yield on a security to its time to maturity, is based on the closing market bid prices on the most recently auctioned Treasury securities in the over-the-counter market. These par yields are derived from indicative, bid-side market price quotations (not actual transactions) obtained by the Federal Reserve Bank of New York at or near 3:30 PM each trading day. The CMT yield values are read from the par yield curve at fixed maturities, currently 1, 2, 3 and 6 months and 1, 2, 3, 5, 7, 10, 20, and 30 years. This method provides a par yield for a 10-year maturity, for example, even if no outstanding security has exactly 10 years remaining to maturity.

Treasury Par Yield Curve Methodology: The Treasury par yield curve is estimated daily using a monotone convex spline method. Inputs to the model are indicative bid-side prices for the most recently auctioned nominal Treasury securities. Treasury reserves the option to make changes to the yield curve as appropriate and in its sole discretion. See our Treasury Yield Curve Methodology page for details.

Author(s): Treasury Dept

Publication Date: 21 Sept 2022

Publication Site: Treasury Dept

Avoiding Unfair Bias in Insurance Applications of AI Models

Link: https://www.soa.org/resources/research-reports/2022/avoid-unfair-bias-ai/

Report: https://www.soa.org/4a36e6/globalassets/assets/files/resources/research-report/2022/avoid-unfair-bias-ai.pdf

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Artificial intelligence (“AI”) adoption in the insurance industry is increasing. One known risk as adoption of AI increases is the potential for unfair bias. Central to understanding where and how unfair bias may occur in AI systems is defining what unfair bias means and what constitutes fairness.

This research identifies methods to avoid or mitigate unfair bias unintentionally caused or exacerbated by the use of AI models and proposes a potential framework for insurance carriers to consider when looking to identify and reduce unfair bias in their AI models. The proposed approach includes five foundational principles as well as a four-part model development framework with five stage gates.

Smith, L.T., E. Pirchalski, and I. Golbin. Avoiding Unfair Bias in Insurance Applications of AI Models. Society of Actuaries, August 2022.

Author(s):

Logan T. Smith, ASA
Emma Pirchalski
Ilana Golbin

Publication Date: August 2022

Publication Site: SOA Research Institute

Will Survivors of the First Year of the COVID-19 Pandemic Have Lower Mortality?

Link: https://crr.bc.edu/working-papers/will-survivors-of-the-first-year-of-the-covid-19-pandemic-have-lower-mortality/

Report: https://crr.bc.edu/wp-content/uploads/2022/08/wp_2022-10.pdf

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The mortality burden of the COVID-19 pandemic was particularly heavy among older adults, racial and ethnic minorities, and those with underlying health conditions.  These groups are known to have higher mortality rates than others even in the absence of COVID.  Using data from the 2019 American Community Survey, the 2018 Health and Retirement Study, and the 2020 National Vital Statistics System, this paper estimates how much lower the overall mortality rate will be for those who lived through the acute phase of the early pandemic after accounting for this selection effect of those who died from COVID.  Such selection may have implications for life insurance and annuity premiums, as well as assessments of the financial standing of Social Security – if the selection is large enough to substantially alter projected survivor mortality.

The paper found that:

  • 10-year mortality rates, absent direct COVID deaths and long COVID, will likely be lower in 2021 than anticipated in 2019.
  • However, these differences are small, ranging from a decline of 0.4 percentage points for people in their 60s to 1 percentage point for those in their 90s.
  • The small difference is in spite of the fact that COVID mortality was, indeed, very selective, with mortality declines exceeding half the maximum possible declines, holding total COVID deaths constant, for every age group.

 
The policy implications of the findings are:

  • That declines in mortality due to COVID selection likely will not impact overall population mortality substantially enough to affect Social Security cost projections.
  • Any impact of selection effects on Social Security costs will likely be swamped by ongoing mortality increases directly attributable to acute and long COVID.

Author(s): Gal Wettstein, Nilufer Gok, Anqi Chen, Alicia H. Munnell

Publication Date: August 2022

Publication Site: Center for Retirement Research at Boston College

Volunteer With SOA Education

Link: https://theactuarymagazine.org/volunteer-with-soa-education/

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As you begin (or consider) volunteering with Society of Actuaries (SOA) Education, you may have questions. As a long-time SOA Education volunteer and past general chairperson of SOA Education, perhaps I have answers that will help.

My volunteer journey began in 1993. I had just obtained my FSA when I got a call from SOA volunteer Bruno Gagnon, FCIA, asking if I wanted to get involved in SOA Education. It’s been an incredible journey of learning, support and networking since. I hope your volunteer journey is just as rewarding.

……

WHAT BENEFITS DOES VOLUNTEERING BRING?
The most interesting aspects of this endeavor are of a different nature. For example, the first privilege was to work with subject-matter experts who were highly regarded and respected in the industry and learn from them. This could be from a technical and leadership point of view. It was rewarding to see a group of volunteers with similar interests working together efficiently while having fun. The members had specific roles and would not hesitate to help their colleagues when needed. Over the years, SOA Education volunteers have shown they can adapt to change quickly. The adjustments that were put in place during the pandemic are a great example.

A member volunteer can gain experience and look for opportunities to grow in their role and take on different responsibilities. The possibilities are diverse, allowing a member to become an expert in their role or a leader within the exam team, depending on their interests, skills and circumstances.

Having participated in all the possible levels within the SOA Education volunteer structure, I honestly can say the experience has been challenging at times—but always highly rewarding. I would relive the journey at any time, as I made very dear friends along the way.

Author(s): STELLA-ANN MÉNARD

Publication Date: Sept 2022

Publication Site: The Actuary, SOA

5 insurance use cases for machine learning

Link: https://www.dig-in.com/opinion/5-use-cases-for-machine-learning-in-the-insurance-industry

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4. Fraud detection

Unfortunately, fraud is rampant in the insurance industry. Property and casualty insurance alone loses about $30 billion to fraud every year, and fraud occurs in nearly 10% of all P&C losses. ML can mitigate this issue by identifying potential claim situations early in the process. Flagging early allows insurers to investigate and correctly identify a fraudulent claim. 

5. Claims processing

Claims processing is notoriously arduous and time-consuming. ML technology is a tool to reduce processing costs and time, from the initial claim submission to reviewing coverages. Moreover, ML supports a great customer experience because it allows the insured to check the status of their claim without having to reach out to their broker/adjuster.

Author(s): Lisa Rosenblate

Publication Date: 9 Sept 2022

Publication Site: Digital Insurance