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  #1  
Old 01-08-2019, 09:04 AM
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therealsylvos therealsylvos is offline
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Default California bans gender rating in auto insurance

https://www.nbcsandiego.com/news/cal...503929691.html

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The change was*applauded by a Los Angeles-based taxpayer and consumer advocacy group Friday.

The rules bring auto insurance prices into line with the provisions of voter-approved Proposition 103 that prohibit unfair and discriminatory pricing and require rates to be based primarily on a person's driving record and experience, not personal characteristics, said Carmen Balber, executive director of Consumer Watchdog.

"Gender and sex have no more place in what we pay for auto insurance than race or ethnicity do. These new rules will finally end gender-based discrimination in auto insurance pricing in California,'' Balber said.

Under the regulations, insurance companies must file new class plans by July 1st of this year. Rate changes for consumers will follow.

"It is clear that the use of gender -- an innate, personal characteristic outside the control of the driver -- must be eliminated to ensure that all California drivers are treated fairly under Proposition 103's protections,'' said Consumer Watchdog attorney Danny Sternberg.

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Proposition 103, which was passed by California voters in November 1988, requires auto insurance premiums to be based primarily on factors within a motorist's control: driving safety record, miles driven, and years of driving experience. It also applied state civil rights laws to insurance, prohibiting discrimination based on sex, race and sexual orientation, among other factors.

Gender had previously been approved as an optional rating factor.
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Old 01-08-2019, 09:07 AM
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curious side question...for those of you in ppa, how are you dealing with gender definitions?
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  #3  
Old 01-08-2019, 09:34 AM
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The UK/Eurozone has been through this, btw -- including life insurance.

http://www.theactuary.com/archive/ol...rating-factor/

Quote:
Insurers bid farewell to the gender rating factor
Insurers will no longer be able to differentiate premiums by gender as a result of a judgment of the European Court of Justice (ECJ). The change will take effect from 21 December 2012. Gender is currently one of the rating factors used to price risks covered by many different types of insurance policies. In some products it is the second-most important factor after age. Current UK gender legislation (and the EU Gender Directive) allows the use of gender as a rating factor when based on actuarial and statistical data on gender-related risk differences but the ECJ has ruled that this does not comply with the EU Treaty.

An Association of British Insurers (ABI) research paper looked at the impact of this legislation on policyholders, insurers and the insurance market. One possibility is that insurers may change their marketing strategy to target the gender with the lower risk cost, thus paying more attention to the mix of business. Consumers in the most affected group may change their actions by opting for lower forms of cover. The suggested impact on policyholders is as follows, split by product:

Motor Insurance
Female drivers under the age of 25 are on average much safer drivers than men of the same age. In this age group, premiums for women will increase. Men may drive more powerful cars as their insurance premiums fall.

Pensions
Currently, men receive a better single life pension income than women, due to their shorter average life expectancy. Women are expected to gain from the changes as their pension income increases whereas men find their pension income falls.

It is compulsory to take some defined contribution pension pots as an annuity, therefore this prevents men from dropping out of the market. In other areas such as personal pensions there may be greater reluctance by men to annuitise when offered the choice of income drawdown instead. However, the charges on income drawdown policies may militate against this option for those with smaller funds.

Life cover
Life cover rates for women are forecast to rise whereas rates for men would fall. This is because women have longer average life expectancy. Insurers have considered using proxies such as body mass index for pricing. Others have considered changing the product design to variable rates or shorterterm products.

Private medical insurance (PMI)
The majority of private medical insurers in the market do not currently price by gender. For those providers who do price by gender, the largest expected differences are in the 35 to 50 age group, where premiums are currently higher for women than for men. The opposite effect is observed in women above 60, where their premiums are cheaper than for men.

Removing gender from pricing models could lead to a fall in the model’s accuracy. However, PMI policies are annually reviewable and the possible changes to premium lower this risk.

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  #4  
Old 01-08-2019, 09:35 AM
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https://www.theguardian.com/money/bl...equality-worse

Quote:
How an EU gender equality ruling widened inequality
It said car insurance firms couldn’t discriminate between the sexes ... since then men have seen a four-fold rise in premiums


Spoiler:
n December 2012 the EU introduced controversial new rules insisting that car insurance companies no longer discriminate on the basis of gender. Until then, men were being routinely charged more than women, but after the European Court of Justice ruled that different premiums for men and women purely on the grounds of sex “were incompatible with the principle of unisex pricing included in EU gender equality legislation”, they had to go – even if it meant women would have to pay more as the gap between the sexes closed.

But what has happened since the rules came into force? Instead of the gap between men’s and women’s premiums narrowing, as expected, it has actually widened. In 2012, men on average paid 27 more for a car insurance policy than a woman, but rather remarkably they now they pay 101 more – nearly a four-fold increase.

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These figures are based on an analysis by Confused.com, which collects 4m quotes every quarter from British drivers looking to arrange their insurance, so one assumes they must be right.

So is this a case of an EU ruling spectacularly backfiring? Of well-meaning but deluded gender warriors in Brussels interfering in places they shouldn’t – and then shooting themselves in the foot? “It’s just equality gone mad” was the sort of comment that greeted this ruling when it was introduced.

So what’s going on here? First, it’s doubtful that the insurance companies are simply ignoring the EU ruling and breaking the law. It’s pretty simple for people like me to test this, by changing my name from Patrick to Patricia on an internet quote engine and seeing if I get different results – and I don’t.

What appears to be at work is that car insurance companies set a price very much according to all the other data they can find on you – without actually asking your gender. So the quote you get back reflects the risks attached to your occupation, how much you drive, the sort of car you drive and whether you have made any modifications to the car.

I asked Confused.com to explain the worsening premiums for men, despite gender equality. It said: “The continuing disparity between men and women could be linked to the fact that certain male-dominated occupations may have a poorer claims experience.

“Also, on average, men may tend to drive larger and more costly vehicles. The more expensive/high-spec the vehicle, the more likely it is that the cost of repairs will be higher, and therefore this is reflected in the premium charged.”

There was a separate report from Moneysupermarket.com earlier in the week which revealed the occupations with the worst rates of drink- and drug-driving. Eight out of 10 of the worst are in the building trade, with scaffolders the worst. On average they have to pay an extra 470 for car insurance following a conviction.

On the other side of the equation are midwives, an occupation the least likely to drink- or drug-drive. Now I don’t want to be accused of sexism, but most scaffolders are probably men, and most midwives, women.

Kevin Pratt of Moneysupermarket.com says: “Women tend to drive fewer miles, have fewer accidents, the accidents they do have are less serious, and they have fewer convictions for drink-driving.

“Insurers don’t look at gender, but they will look at all these characteristics very carefully.”

My conclusion is that the EU ruling has done women a favour. Before, insurers bluntly charged you a bit more if you were male, a bit less if you were female. Now they have to price it according to rather more concise data reflecting your individual driving behaviour.

My guess is that women were actually paying too much before the ruling and are now paying premiums that more accurately reflect their risk.

Car insurance may have become less equal. But it is more fair.


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Old 01-08-2019, 10:01 AM
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Wow, big win for the regulatory establishment, massive blow to auto insurers. Gender, particularly interacting with other variables has strong predictive value. Ouch.

Also, how's the department going to have enough time to review all of these filings? And just because file by 7/7 could have a much further into the future effective date.
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Old 01-08-2019, 10:01 AM
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Massachusetts has done this for years:

https://www.mass.gov/service-details...bile-insurance

Quote:
You have the right to an insurance rate that is not unfairly discriminatory.

An insurance company may use many different factors to determine your insurance rate. Massachusetts prohibits insurance companies from using factors such as: sex, marital status, race, creed, national origin, religion, age (except to provide the discount for persons who are 65 years or older), occupation, income, education and home ownership. Companies also may not use credit information contained on your consumer report that is obtained from a consumer reporting agency.
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Old 01-08-2019, 10:03 AM
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Quote:
Originally Posted by Noonien Soong View Post
Wow, big win for the regulatory establishment, massive blow to auto insurers. Gender, particularly interacting with other variables has strong predictive value. Ouch.

Also, how's the department going to have enough time to review all of these filings? And just because file by 7/7 could have a much further into the future effective date.
Not really, if no one else can use it, you won't face much adverse selection. Especially since auto insurance is generally required, and most young people (where the rates are significantly different) buy the legal minimum. So not only can customers not shop for the company that takes their gender into account, they also can't just decide to drop coverage.
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Old 01-08-2019, 10:09 AM
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Quote:
Originally Posted by PeppermintPatty View Post
Not really, if no one else can use it, you won't face much adverse selection. Especially since auto insurance is generally required, and most young people (where the rates are significantly different) buy the legal minimum. So not only can customers not shop for the company that takes their gender into account, they also can't just decide to drop coverage.


Going to be a pain to update the rating plan, but overall, not that big of a deal from a rating perspective once it is all done.

A bigger concern could be the collection of data.
I have not seen this discussed, but if you are not able to even collect gender from California insureds then that could have a larger impact on how many companies perform "countrywide" analysis.
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Old 01-08-2019, 10:11 AM
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Quote:
Originally Posted by PeppermintPatty View Post
Not really, if no one else can use it, you won't face much adverse selection. Especially since auto insurance is generally required, and most young people (where the rates are significantly different) buy the legal minimum. So not only can customers not shop for the company that takes their gender into account, they also can't just decide to drop coverage.


Households with youthful inexperienced female drivers will likely shop just because their rates went up, so one company's lapse in this demographic will more likely be made up by attracting the same demographic from a competitor.

However, the impact will not be as significant as a simple comparison of rates between the genders. Take gender out of the model and the remaining variables will adjust accordingly.
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Old 01-08-2019, 10:13 AM
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Quote:
Originally Posted by PeppermintPatty View Post
Massachusetts has done this for years:

https://www.mass.gov/service-details...bile-insurance

Quote:
You have the right to an insurance rate that is not unfairly discriminatory.

An insurance company may use many different factors to determine your insurance rate. Massachusetts prohibits insurance companies from using factors such as: sex, marital status, race, creed, national origin, religion, age (except to provide the discount for persons who are 65 years or older), occupation, income, education and home ownership. Companies also may not use credit information contained on your consumer report that is obtained from a consumer reporting agency.
bolding added.
Intuitively speaking, wouldn't 65+ deserve a surcharge? But I've not been in the PPA world in years.
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