Q:

What is unfair discrimination?

A:

Unfair discrimination is used in the insurance industry and it refers to insurers basing their policy terms on irrelevant information. Some unfair discrimination subjects are religion, gender and race.

Discrimination occurs in the insurance industry all the time. The word "discrimination" has a negative overtone but, in the world of insurance, it simply refers to a routine decision-making process. Insurers discriminate in order to evaluate risks and calculate probable loss on the person or thing they are insuring. For example, they discriminate in order to decide which types of drivers they will offer insurance to, and how much to charge them in premiums.

However, there are two types of discrimination: fair and unfair. In the case of car insurance, an insurer practicing fair discrimination would take into account the driver's record of driving violations and what type of car the driver owns. All of this information is relevant to the insurer's decision making process.

Insurers cross the line into unfair discrimination when they consider irrelevant information. For example, the driver's race, sexual orientation and religion should have no bearing on how much the driver should pay for car insurance, or on whether the insurance company decides to offer them insurance at all. This type of discrimination is illegal and generally considered a violation of the state's insurance codes.


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