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Insurance Business | 21 Sep 2017, 10:49 AM Agree 0
Regulator based its decision on recent investigative report which alleged biased overcharges
  • Sal Minella | 21 Sep 2017, 11:37 AM Agree 1
    I don't propose to know all the facts about the discrimination going on, but I have an idea of what is happening. So, I am the insurance company and I look at data that shows that more cars are stolen and damaged in a certain area, raising my risk. So, I adjust my rates accordingly for the risk. The same way a company might charge a higher rate for a home that does not have a fire hydrant. So, you'll just drive the companies out. It has to do with risk, not discrimination.
    • | 21 Sep 2017, 12:03 PM Agree 0
    • KMPNW | 21 Sep 2017, 12:08 PM Agree 0
    • Jake | 21 Sep 2017, 01:19 PM Agree 0
      I work for an insurance company and this is exactly it. Geographical rates are set by the loss experience in each given area. That's not to say there isn't a correlation between geographic area and racial demographics, but where do you draw the line? If there's higher auto insurance rates in a zipcode highly populated with retirement homes (and the loss experience is poor), is charging more really age discrimination? Where's the balance between single payer, socialized insurance and actually matching rate with risk?
  • Dave | 21 Sep 2017, 12:00 PM Agree 0
    Nope, "Sal". You got that wrong. Enjoy your trolling.
    • Ken | 21 Sep 2017, 03:28 PM Agree 0
      explain how he is wrong
  • Kenny | 21 Sep 2017, 12:16 PM Agree 0
    I agree! The law in California sounds like socialized insurance instead of market based risk. Who gives the right to a Hollywood star's home being bigger and nicer than mine?
  • Good Hands | 21 Sep 2017, 12:33 PM Agree 0
    Umm... Did they investigate to see if losses were actually higher for risks garaged in these zip clusters? Discrimination is not per se unfair if it is backed up by fact.
  • Ron | 21 Sep 2017, 12:33 PM Agree 0
    I'm not licensed to sell insurance in CA (& have zero interest to do so), but I would wager that the auto insurance application in that state does not have any question asking about race. If CA is worried about discrimination, perhaps they need to remove gender. Out of curiosity, does the application still ask gender and what are those options?
  • JKG | 21 Sep 2017, 12:55 PM Agree 0
    The same discrimination is going on in North Carolina. The difference is NC is that the discrimination is sanctioned by the insurance regulators.
  • Jay | 21 Sep 2017, 01:02 PM Agree 0
    I'm an insurance broker. I clicked this link just to see if the offending carriers were consistent with my own agency observations. No surprises here. Eagerly wait to see next steps. And Sal (aka Salmonella - a potentially dangerous infection)...You are an idiot!
    • DMZ | 22 Sep 2017, 11:53 AM Agree 0
      Jay, you may want to take some CE courses to find out how companies derive rating adequacy. Obviously you don't know.
  • PStrickland | 21 Sep 2017, 01:11 PM Agree 0
    Sal, I think you missed this paragraph "minority neighborhoods more than policyholders with similar risk profiles who live in predominantly white neighborhoods." **SIMILAR RISK PROFILES** The neighborhoods had similar claim experience, NOT more claims. So no, you don't know all the facts. You didn't even read the article carefully.
    • Words Matter | 21 Sep 2017, 01:59 PM Agree 0
      The accusation is that a good driver in a high claim zip code pays more than a good driver in a low claim zip code. That is the part about "similar risk profile". The similarity is on the part of the drivers (age/experience, credit, driving history). The dissimilarity according to the insurance companies is not the race within the zip code but the claims frequency and severity in those zip codes. This is a debate worth having. The definition of underwriting is to discriminate (charge higher rates or lower rates) based upon common loss characteristics in order to provide a service to the customers and maintain solvency. But how far should an insurance company go? Does a smoker get more distracted than a nonsmoker? Are left-handed drivers better risks than right-handed drivers? Is a 25 year old college graduate safer than a 25 year old GED driver? The D.O.I. has a job to set a limit to the depth that an insurance company can dig to find the best rates for some customers (and consequently the worst rates for others). I personally disagree with CA on this one situation. Some zip codes are worse for insurance companies than others. And this zip code rates whites and blacks within that zip code the same. But I agree that there are limits which should be managed by the DOI. Just because an insurance company has supporting data does not make it appropriate.
    • Ron | 21 Sep 2017, 02:46 PM Agree 0
      I re-read article. I wonder if the DOI of CA stopped short of performing a careful analysis of what constitutes "SIMILAR RISK PROFILES"? When selecting enough similar risk profiles one can develop an argument on any claim (or subject), however ignoring data which actually determines risk management is negligent. Did CA removed insurance scoring as a variable in the development of rates, if not did CA include this variable in their analysis? Not doing so could make their claim skewed, therefore an unfair analysis. I re-read Sal's comments, it appears to me that he was simply pointing out that insurance is based upon risk management and that there are 100's of variables used to determine rates; other than "Similar". So if ALL those risk profiles are truly similar, then what the carrier did was just wrong! I'm just doubtful that they are.
  • | 21 Sep 2017, 01:17 PM Agree 0
    Sal you are correct. That is why insurance rate are higher in big city compared to rural areas. More exposure requires more premium to pay the claims
  • | 21 Sep 2017, 07:04 PM Agree 0
    Sal nailed it. It would be the same as saying it's age discrimination for a young driver vs an experienced driver. Common sense Dave.
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