Insurer Practices/Profits

Insurance Industry-Funded “Insurance Legislators” Resolve to Protect Systemic Bias in Insurance Pricing

NCOIL Ignores Actuarial Standards and Hides Behind “States’ Rights” to Protect Insurers’ Unfair Discrimination Against Communities of Color

Washington, D.C. – The National Council of Insurance Legislators (NCOIL) adopted a resolution today that aims to stop insurance regulators from developing best practices for evaluating and regulating insurance company premiums on grounds that both misunderstand actuarial principles and rely on a faulty “States’ Rights” argument to preserve the status quo, according to the Consumer Federation of America (CFA). NCOIL, which leveled today’s attack on a National Association of Insurance Commissioners (NAIC) white paper, is an insurance-funded organization that develops its own model legislation invariably aligned with industry wishes.

The action by NCOIL – in which it adopted an obscure resolution against a part of a draft white paper – is notable because it reveals the behind-the-scenes efforts of insurance companies to stave off real reform of insurance practices that reinforce structural racism in American society. Namely, NCOIL attacks the NAIC – itself a state-based organization – for seeking to identify regulatory best practices for overseeing complex industry pricing models. In its resolution, NCOIL calls the white paper “an improper intrusion into State Legislatures’ Constitutional authority.” The echoes of States’ Rights arguments for racist policies is amplified by the particular concern NCOIL prioritizes: any efforts by regulators to prevent proxy discrimination by insurance companies, in which ostensibly race-neutral pricing factors are actually surrogates for racial discrimination. CFA recently released data illustrating how this type of pricing leads to significantly higher auto insurance rates for African American drivers.

As the Center for Economic Justice explained in  June 28 comments to NCOIL:

The repeated references to “correlation” are an endorsement of proxy discrimination. By declaring that any correlation is sufficient justification – even if that correlation is a proxy for discrimination against a protected class – and defending such proxy discrimination on the basis of states’ rights ignores and repudiates the commitment and efforts by industry and regulators to address systemic racism in insurance.

The resolution’s claim that an insurer should be able to use any rating factor that shows a “correlation” to risk is out of step with actuarial standards and public policy, according to CFA’s Insurance Director J. Robert Hunter, an actuary and former Texas Insurance Commissioner. NCOIL’s demand that regulators approve any rating system that shows evidence of a correlation is a defense of outdated pricing schemes that can only serve to protect insurance companies from challenges to their discriminatory practices.

“The state legislators who supported this resolution should be ashamed of themselves,” said Hunter. “They have decided that protecting insurance companies’ unfair price discrimination that particularly hurts Black policyholders is necessary at the very time the rest of America is looking to remedy the historic and institutionalized racism that has plagued our nation for generations.”

The resolution was sponsored by NCOIL Vice President Asm. Ken Cooley (CA). CFA notes that at least five members of the group voted against the resolution, including: Asm. Kevin Cahill (NY), Asm. Pam Hunter (NY), Rep. Edmund Jordan (LA), Asm. Ellen Siegel (NV), and Asm. Andrew Garbarino (NY).


Doug Heller, 310-480-4170

J. Robert Hunter, 703-528-0062