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  #1  
Old 05-22-2006, 03:44 PM
ShortBus ShortBus is offline
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Female=cheaper car insurance. Why is this legal?

I'd like to know why it's legal to sexually discriminate in car insurance rates. Even if studies solidly supported the statement "Latinos are twice as likely to be involved in an auto accident than caucasians" (or vice versa, for example), there's no way a company could get away with raising rates based soley on ethnicity.
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  #2  
Old 05-22-2006, 03:57 PM
ultrafilter ultrafilter is offline
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Insurance companies would be allowed to charge more for certain ethnic groups if ethnicity was shown to be a statistically significant predictor of how likely a person is to file a claim and there were a reliable test for membership in those groups. Both of those conditions are true for gender (at least among young people--does the difference drop off with age?), and so it's an allowed discriminant. You can see similar and related discussions we had a while back here, here and here.
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Old 05-22-2006, 04:00 PM
ShortBus ShortBus is offline
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Thanks for the threads.
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  #4  
Old 05-22-2006, 04:49 PM
Freddy the Pig Freddy the Pig is offline
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Quote:
Originally Posted by ShortBus
I'd like to know why it's legal to sexually discriminate in car insurance rates.
Because the legislature of your state has said that it is.
Quote:
Even if studies solidly supported the statement "Latinos are twice as likely to be involved in an auto accident than caucasians" (or vice versa, for example), there's no way a company could get away with raising rates based soley on ethnicity.
That's correct. Every state outlaws insurance price discrimination based on racial and ethnic considerations, whether it can be actuarially supported or not.

Why the difference? Well, your legislators made a value judgment, and I hesitate to speak on their behalf. But some of the factors are surely:

(1) There is a long history of racial and ethnic discrimination in this country, which we today regard as odious. It's something we're trying to get away from. It strikes people as especially repugnant, and will not be tolerated except in the most extraordinary circumstances (for example, if you're trying to find an actor to play Martin Luther King.)

(2) We also have a history of gender discrimination, but insurance pricing is an exception because actuarially sound rates tend to favor women. There is no doubt that the tendency of insurance gender discrimination to favor the historically disadvantaged sex plays a part in its legality.

(3) The majority of people still tend to form male-female family units at some point in their life, so people tend not to get too exercised over gender discrimination, reasoning that what hurts one half of the pair-bond will help the other.
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  #5  
Old 05-22-2006, 05:00 PM
guizot guizot is offline
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But they can effectively discriminate by ethnicity by using zip codes, which is what they do.
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  #6  
Old 05-22-2006, 05:17 PM
Freddy the Pig Freddy the Pig is offline
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Quote:
Originally Posted by guizot
But they can effectively discriminate by ethnicity by using zip codes, which is what they do.
That's correct, and racial correlation has occasionally been used to argue against geographic classification as well. In general, however, actuarially supportable geographic classification is legal.

This represents more value judgments, but factors behind its (usual) legality are:

(1) Differences in auto and property claims by region are so obvious, and so pronounced, that to require insurance companies to ignore them would amount to a huge, mandatory subsidy from urban to suburban and rural residents.

(2) Actuarially sound zip code classification inevitably results in some low-cost minority areas and some high-cost white areas, so it's easy to demonstrate that it isn't the same as flat-out racial discrimination.
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  #7  
Old 05-22-2006, 05:55 PM
The Great Sun Jester The Great Sun Jester is offline
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Quote:
Originally Posted by guizot
But they can effectively discriminate by ethnicity by using zip codes, which is what they do.
I'm probably just a bit slow today, but I don't understand why an insurance company would even WANT to discriminate racially simply for the sake of furthing some nefarious racist agenda. The money is all green, and at the end of the day even the most consumer-oriented insurance company is all about numbers, stats and profit if only because solvency benefits the policyholders at claim time.

I can say with certainty that there are areas that can statistically be proven to correspond to disproportionately higher occurrences of certain types of loss, but I fail to see how responding with proportionately higher rates for these areas is remotely racist simply because these regions are coincedentaly inhabited primarily by elves.

It's my opinion that people just hate what they don't understand (and most folks don't or won't understand insurance) and find all kinds of reasons to believe they are being unfairly singled out by the hated entity.
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  #8  
Old 05-22-2006, 07:07 PM
Spectre of Pithecanthropus Spectre of Pithecanthropus is offline
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In my state, for my company, also:

Policyholder's occupation {engineer, doctor, teacher} =cheaper car insurance.

In other words, they can charge you more or less depending on your job.
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  #9  
Old 05-22-2006, 08:07 PM
Cardinal Cardinal is offline
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Quote:
Originally Posted by Freddy the Pig
Because the legislature of your state has said that it is. That's correct. Every state outlaws insurance price discrimination based on racial and ethnic considerations, whether it can be actuarially supported or not.
This occurred to me when I was selling life insurance, and besides the political free-for-all that would happen if the companies based rates on "race", it really wouldn't be in their interest anyway.

Imagine the nubmer of complaints and suits about what "race" someone is. Exactly how dark do you have to be to be "black"? Does Colin Powel count? Does Derek Jeter count? Define "Latino" in a way that couldn't be shot full of holes by a decent lawyer.

"I'm not Arab, I'm Persian! All you Yankees keep on lumping us together!"

"I may be Chinese, but I'm not Han!"

Cecil pointed out that counting the pygmies and the Masai, it's arguable there's more significant genetic variation among African blacks than among white Europeans, despite the similar hair and other mundanities.
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  #10  
Old 05-22-2006, 08:17 PM
Zoe Zoe is offline
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I complained to the ACLU about the sexual discrimination on insurance rates in the 1970's. (I really didn't understand at the time if it was a civil liberties matter.) There I was -- a woman making a complaint to a male who defended the practice!

Hey. We should have passed the ERA.
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  #11  
Old 05-23-2006, 04:25 AM
Northern Piper Northern Piper is online now
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This issue went to the Supreme Court of Canada several years ago: Zurich Insurance Co. v. Ontario (Human Rights Commission). Court upheld differential rates, 5-2, based on the Human Rights Code's provision for bona fide exceptions.
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  #12  
Old 05-23-2006, 05:08 AM
Mellivora capensis Mellivora capensis is offline
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Quote:
Originally Posted by Northern Piper
This issue went to the Supreme Court of Canada several years ago: Zurich Insurance Co. v. Ontario (Human Rights Commission). Court upheld differential rates, 5-2, based on the Human Rights Code's provision for bona fide exceptions.
Interesting. We used that exact case as a defence in our submission to the South African Human Rights Commission on a gender discrimination case, which they seem to have accepted as valid and justifiable (no news is good news). Generally speaking, and more so from an insurance perspective, discrimination in and of itself is not illegal. It all comes down to the operative word "unfair". If it can be shown that the discrimination is unsubstantiated and unquantifiable, it is thus unfair, and therefore illegal.

I'm not aware of any ethnic discrimination factors in our rating modules.
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Old 05-23-2006, 05:15 AM
chrisk chrisk is offline
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Quote:
Originally Posted by Mellivora capensis
Generally speaking, and more so from an insurance perspective, discrimination in and of itself is not illegal. It all comes down to the operative word "unfair". If it can be shown that the discrimination is unsubstantiated and unquantifiable, it is thus unfair, and therefore illegal.
Hmmm... the way you phrased that brings up an interesting question. Is the burden of proof on the insurance company to show that the discrepancy is substantiated, or on the complainant to show that it is UNsubstantiated??
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  #14  
Old 05-23-2006, 06:24 AM
JillGat JillGat is offline
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[[(3) The majority of people still tend to form male-female family units at some point in their life, so people tend not to get too exercised over gender discrimination, reasoning that what hurts one half of the pair-bond will help the other.]]

Which is why, similarly, men usually don't get up in arms about "Ladies get in free/drinks half off" happy hours in bars.

I knew about cheaper insurance rates for women. But I wonder about the zipcode thing. Do insurance companies tell clients about these factors influencing their rates? There are lots of Mexican national people in my area - many of whom are probably uninsured drivers. I don't think that plays into my insurance rate, but I don't know.

I do know that if I ask for insurance for my Kawasaki 250 cc motorcycle, the rates are different than if I get quotes for my Kawasaki NINJA 250 cc motorcycle.
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  #15  
Old 05-23-2006, 06:26 AM
Mellivora capensis Mellivora capensis is offline
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Quote:
Originally Posted by chrisk
Hmmm... the way you phrased that brings up an interesting question. Is the burden of proof on the insurance company to show that the discrepancy is substantiated, or on the complainant to show that it is UNsubstantiated??
Good question. I must admit that at first glance it does seem to fly in the face of "he who alleges must prove". However, if I look at it more closely it would seem from our particular case that the discrimination was factually evident, in other words, the complainant was indeed paying more than a female equivalent. Thus "discrimination" in it's purest form was undisputed by us, much like in the Zurich/Ontario case where the insurer conceded the breach, but raised a valid defence. It was then up to us to argue our defence, justify why we had discriminated, and to convince the Commission that it was fair.

Oh, and the usual caveat applies, IANAL, I just report directly to one.
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  #16  
Old 05-23-2006, 06:49 AM
Musicat Musicat is offline
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In short, ShortBus, insurance companies would like to divide the insured into many different categories based on their actuarial experience, if that experience has shown such categories to be sufficiently different in claims paid. Then they can offer the best groups the best rates, while still covering their losses on the worst groups.

Laws, based on perceived discrimination or real, allow some of these divides while prohibiting others. Race is a hot button subject when it comes to discrimination, but grouping insured by type of vehicle is not (if you can afford a race car, you can afford the higher insurance).
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  #17  
Old 05-28-2006, 11:03 AM
Northern Piper Northern Piper is online now
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Quote:
Originally Posted by chrisk
Hmmm... the way you phrased that brings up an interesting question. Is the burden of proof on the insurance company to show that the discrepancy is substantiated, or on the complainant to show that it is UNsubstantiated??
In civil proceedings, it's not uncommon to have shifting onuses of proof - the plaintiff/complainant/petitioner bears the original onus of proof, to show a prima facie case that there has been a breach of the civil law. The onus may then shift to the defendant/respondent to prove a defence to the allegation.

How it works in a particular discrimination or human rights claim will depend on the governing statute in that jurisdiction. In Canada, "bona fide occupational requirements" and the like are often treated as defences which the defendant/respondent must prove, but only if the plaintiff/complainant/petitioner has first made out the prima facie case.
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Old 05-28-2006, 11:04 AM
Northern Piper Northern Piper is online now
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Quote:
Originally Posted by Mellivora capensis
Interesting. We used that exact case as a defence in our submission to the South African Human Rights Commission on a gender discrimination case, which they seem to have accepted as valid and justifiable (no news is good news).
Interesting indeed. I'd heard that SCC cases are often cited in the South African courts.
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  #19  
Old 05-28-2006, 11:14 AM
Lightnin' Lightnin' is offline
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I wonder if the situation was reversed, and females had to pay higher rates, would it be as acceptable?

I kinda doubt it.
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  #20  
Old 05-28-2006, 01:15 PM
Canadjun Canadjun is online now
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Quote:
Originally Posted by Lightnin'
I wonder if the situation was reversed, and females had to pay higher rates, would it be as acceptable?
IF as a group they had more claims, why wouldn't it be acceptable?
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  #21  
Old 05-28-2006, 05:38 PM
Cunctator Cunctator is offline
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Quote:
Originally Posted by Lightnin'
I wonder if the situation was reversed, and females had to pay higher rates, would it be as acceptable?

I kinda doubt it.
Women's mortality rates are lower, on average, than men's and they therefore have longer life expectancies. This leads to the situation in life insurance where term insurance rates for women are generally lower than those for men, but annuity rates for women are generally higher than those for men. This is perfectly logical on an actuarial basis and is also recognised in most jurisdictions as a valid exception to any sex discrimination legislation.
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  #22  
Old 05-28-2006, 06:22 PM
OldGuy OldGuy is online now
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Quote:
Originally Posted by Cunctator
Women's mortality rates are lower, on average, than men's and they therefore have longer life expectancies. This leads to the situation in life insurance where term insurance rates for women are generally lower than those for men, but annuity rates for women are generally higher than those for men. This is perfectly logical on an actuarial basis and is also recognised in most jurisdictions as a valid exception to any sex discrimination legislation.
I wish I could recall the details of a big fight about this. The complaint was that women were discrimnated against by the higher annuity rates and they were changed, but tehn the life insurance ratees were not changed similarly. Was it TIAA?
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  #23  
Old 05-28-2006, 09:31 PM
Mister Rik Mister Rik is offline
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Is the ubiquitousness of cell phones going to eventually lessen the discrepancy in accident rates between male and female drivers? I seem to see more women than men talking on their cell phones while driving. With kids in the car! Won't somebody think of the children?
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