Understanding Insurance Anti-Discrimination Laws

80 Pages Posted: 25 Aug 2012 Last revised: 24 Jul 2019

See all articles by Ronen Avraham

Ronen Avraham

Tel Aviv University - Buchmann Faculty of Law; University of Texas at Austin - School of Law

Kyle D. Logue

University of Michigan Law School

Daniel Schwarcz

University of Minnesota Law School

Date Written: August 24, 2012


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.

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

JEL Classification: K00

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, Southern California Law Review, Vol. 87, Available at SSRN: https://ssrn.com/abstract=2135800 or http://dx.doi.org/10.2139/ssrn.2135800

Ronen Avraham

Tel Aviv University - Buchmann Faculty of Law ( email )

Ramat Aviv
Tel Aviv, 69978

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://kylelogue.net

Daniel Schwarcz

University of Minnesota Law School ( email )

229 19th Avenue South
Minneapolis, MN 55455
United States

HOME PAGE: http://www.law.umn.edu/profiles/daniel-schwarcz

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