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Is insurance industry discriminating by race?

Is insurance industry discriminating by race?

Is insurance industry discriminating by race? It was two weeks ago that we published an article entitled “Controversy over ethnic penalties in insurance” as former equality commissioner Trevor Phillips suggested that policyholders are paying an effective ethnic penalty as high as £450 a year in the UK.

The response from the insurance industry was swift – with the Association of British Insurers slamming the report and claiming it “was compiled without any consultation with the insurance industry” and “was paid for by a firm of solicitors with a vested interest in fuelling the compensation culture”.

However, the issue shows no signs of dying down as last week we reported on Thompsons Solicitors slamming Admiral’s record results – and now Trevor Phillips has once again raised the issue with the national press, with an article published in The Financial Times.

Within the article, Phillips states that “big data may finally be… revealing the emergence of algoracism” – that is discrimination by computer code.

He points to experiences beyond the insurance sector claiming that when he worked at the Commission for Racial Equality, small business owners in the predominantly Sikh area of Southall informed him that they were being rejected for loans by banks – decisions that were being made by a computer. He states that “culturally debt-averse corner shop owners” were rejected “because they had no record of paying back loans”. He then points to an example of Airbnb reviewing its processes after claims its platform provides room for discrimination.

He then goes on to once again highlight the insurance issue and the research which he suggests shows a statistical correspondence between ethic prevalence in a postcode and higher car insurance premiums – highlighting the variations cannot be accounted for due to affluence or crime. Indeed he suggests around eight million people have a “prima facie case for indirect discrimination”.

In his conclusion he states that it is an “unforgivable crime” to know that we have “institutionalised racism” and to not do anything about it.

How do you react to the writer’s claims? Do you believe the suggestion that there is “algo-racism” or is he wide of the mark? Leave a comment below with your thoughts.


Related stories:
Admiral slammed on back of record results
Controversy over “ethnic penalties” in insurance