Abstract

http://ssrn.com/abstract=2135800
 
 

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Understanding Insurance Anti-Discrimination Laws


Ronen Avraham


University of Texas at Austin - School of Law

Kyle D. Logue


University of Michigan Law School

Daniel Schwarcz


University of Minnesota Law School

August 24, 2012

U of Michigan Law & Econ Research Paper No. 12-017
U of Michigan Public Law Research Paper No. 289
U of Texas Law, Law and Econ Research Paper No. 234
Minnesota Legal Studies Research Paper No. 12-45

Abstract:     
Insurance companies are in the business of discrimination. Insurers attempt to segregate insureds into separate risk pools based on their differences in risk profiles, first, so that they can charge different premiums to the different groups based on their risk and, second, to incentivize risk reduction by insureds. This is why we let insurers discriminate. There are, however, limits to the types of discrimination we will allow insurers to engage in. But what exactly are those limits and how are they justified? To answer these questions, this Article articulates the leading fairness and efficiency arguments for and against limiting insurers’ ability to discriminate in their underwriting; identifies on this basis a set of predictions as to what one would expect state antidiscrimination laws to look like; and evaluates some of those predictions against a unique handcollected dataset consisting of the laws regulating insurer risk classification in all 51 U.S. jurisdictions. Among our findings is that contrary to the conventional wisdom state insurance anti-discrimination laws vary a great deal, in substance and in the intensity of regulation, across lines of insurance, across policyholder characteristics, and across states. The Article also finds that, contrary to our predictions, a surprising number of jurisdictions do not have any laws restricting insurers’ ability to discriminate on the basis of race, national origin, or religion. It concludes by discussing whether this fact indicates that states have inadequately policed unfair discrimination in insurance or impacts the larger policy decision in this country to leave insurance anti-discrimination law to the states.

Number of Pages in PDF File: 52

Keywords: Civil Rights and Discrimination, Economics, Insurance Law, Law and Economics

JEL Classification: K00

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Date posted: August 25, 2012 ; Last revised: March 27, 2013

Suggested Citation

Avraham, Ronen and Logue, Kyle D. and Schwarcz, Daniel, Understanding Insurance Anti-Discrimination Laws (August 24, 2012). U of Michigan Law & Econ Research Paper No. 12-017; U of Michigan Public Law Research Paper No. 289; U of Texas Law, Law and Econ Research Paper No. 234; Minnesota Legal Studies Research Paper No. 12-45. Available at SSRN: http://ssrn.com/abstract=2135800 or http://dx.doi.org/10.2139/ssrn.2135800

Contact Information

Ronen Avraham
University of Texas at Austin - School of Law ( email )
727 East Dean Keeton Street
Austin, TX 78705
United States
(512) 232-1357 (Phone)
HOME PAGE: http://www.utexas.edu/law/faculty/profile.php?id=ra22397

Kyle D. Logue (Contact Author)
University of Michigan Law School ( email )
625 South State Street
Ann Arbor, MI 48109-1215
United States
734.936.2207 (Phone)
HOME PAGE: http://cgi2.www.law.umich.edu/_FacultyBioPage/facultybiopagenew.asp?ID=220

Daniel B. Schwarcz
University of Minnesota Law School ( email )
229 19th Avenue South
Minneapolis, MN 55455
United States
Feedback to SSRN


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