NAIC Will Scrutinize Practices for Racial Bias
The National Association of Insurance Commissioners (NAIC) will launch a wide-reaching effort to scour through existing practices — in sales, pricing, underwriting, and all other facets of insurance — to identify those that may disadvantage minorities, according to NAIC President and South Carolina Insurance Director Ray Farmer.
“Everything about race and insurance is on the table,” Farmer adds. The May killing of George Floyd at the hands of Minneapolis police and the protests that followed “shined the spotlight on everything,” he explains. “We will look at everything in the insurance-regulatory system to make sure there are no unintended biases in there.” Moreover, he says increasing employment opportunities for minorities is a key part of the NAIC’s initiative.
Credit scoring and artificial intelligence (AI) may come under renewed scrutiny. Auto insurers say the use of credit histories and occupation help them identify applicants that have the costliest claims and are good predictors of risk. NAIC CEO Michael Consedine says that the NAIC wants to challenge conventional thinking in areas like using credit factors by asking: “Are there better, fairer ways to do these things?” The NAIC also plans to look into products where artificial intelligence and other “Big Data” techniques are in nascent stages.