So, apparently if you are a male, an insurance company can charge you a higher premium to pay each month than a woman of the same age. I assume this is due to statistical data that says that men are more apt to die before women. I just wonder if this will ever be challenged as being a sexist policy. After all, I’m sure statistics also point out that African-Americans have shorter life expectancies than those of European descent, and yet there is no way a company could get away legally with charging a different rate due to race.
Similarly, when I was in California some years ago, I was unable to rent a car from many rental agencies due to being under 25, and the one company that would rent was allowed to nearly double the cost! (This was really frustrating as my record was spotless, and yet I was being penalized.
You can still discriminate against males, the young, short people, bald people and overweight people. Pray for the ones that are 3 or more on that list at the same time…
At my company, health insurance rates are the same regardless of gender (women pay more for health insurance including the risk of pregnancy). However, men pay higher for life insurance? What? Why is it fine to spread the cost one way but not the other?
“After all, I’m sure statistics also point out that African-Americans have shorter life expectancies than those of European descent, and yet there is no way a company could get away legally with charging a different rate due to race.”
Life and health insurance I don’t know, but the insurance companies tend to discriminate in the issuance of homeowners and automobile insurance on the basis of whether you’re in a city proper or its suburbs, which I would argue is at least partially attributable to the perception that the dangerous “they” (poor, minorities, whatever) live in the city and not the suburbs.
This city/suburb distinction has nothing to do with the quality of the particular neighborhood. Where I live is a suburban neighborhood of 1920s bungalows inhabited by white middle-class residents. Across a main street is a city neighborhood of 1920s bungalows inhabited by white middle-class residents. City neighborhood is a bit farther from its police station that we are from ours, but fire service, water & sewers, etc. are comparable. When we shared the same post office, and thus ZIP code, with the city neighborhood, we paid the same insurance rates for homeowners’ and auto. But once we (after years of lobbying the Postal Service back to when it was the Post Office Department) got the ZIP code boundaries redrawn so the suburb had its own ZIP code, our homeowners’ and auto insurance rates went down noticeably. Nothing changed but that we were no longer lumped in in the insurance company computers with the rate-increasing “them”. QED
The ERA would not have had any effect on insurance companies charging men and women different premiums. The amendment applied only to the federal government and the states.
This is a provision that will probably go away in the near future.
A long time ago, men worked at dangerous, physically demanding jobs and women stayed home. Smoking used to be primarily a masculine activity, now women smoke as much or more than men. Over the years, the expected mortality rates of men and women have become more aligned, and probably very soon women will be paying more for life insurance, just as men do.
As far as health insurance, that’s a difference between mortality (the statistical expectancy of a particular person’s length of life) and morbidity (expressed as the statistical likelihood of an illness). Death is a binary state (either you’re dead or your’e not, except for Al Gore, who seems to exhibit signs of both). Health is more of an analog function, you could be perfectly healthy (eh, probably not), or you could be perfectly unhealthy (i.e., dead), but most likely you are somewhere in between. It’s a different risk, and one that is shared more evenly between men and women.
Insurance companies can charge different rates for age, gender, marital status, geographic location, and disability as long as there is sound evidence to back up the reasoning.
They can not charge differently based on things like race, color, religion, or national origin.
In the UK at least the different rates have been challenged and the challenge thrown out.* There are frequent large studies on mortality and mortality rates across the population are known with actually fairly good accuracy. The simple fact is at all ages a man is more likely to die than a woman (his force of mortality is higher). FWIW a woman’s force of morbidity (probability of contracting a serious disease) is higher at all ages than a man’s).
Courts have decided that the concrete evidence allows insurance companies to charge higher rates for insurance to men than women. It also allows them to charge less for a pension for a man versus a woman.
Why is there much less “discrimination” for other characteristics, such as smoking status? Objectivity. “Male/Female?” is a question with a simple answer. “Smoking status?” or “Occupation?” are not, and can easily change. Ethnic origin has not been shown to have any noticable effect on mortality.
So why do company insurance schemes often charge the same to men and women? Ease of administration. The force of mortality for your average office-working Joe or Joan is very small, so for administrative ease (making it cheaper for BOTH sexes) a simple across-the-board rate per sum insured is quoted instead.
S’clear?
pan
*I think. No time for a cite I’m afraid. The challenge was in the early-ish nineties and may never actually have seen the light of day in the courts. Unisex rates were flirted with for a while, just in case, but we have now reverted back to single-sex
What you say may be quite true in Great Britain, but I am certain it is not true in the United States. Over here there is a pronounced difference in mortality between the white population and the black population, though IIRC it is not quite as pronounced as that between the male and the female population. If it were legal in the U.S. to discriminate on the basis of race in charging premiums, there would be no shortage of actuarial grounds for doing so.
Whilst I don’t know the exact details, I’m still going to take a very educated guess that the difference is NOT due to genetic differences between race, but rather due to a correlation between ethnic origin and occupation or location of home. There most certainly IS a relationship between those factors and mortality. A lot of insurance is about determining the TRUE causes of risk, rather than the apparent ones. You must isolate the independent perils, so that you don’t have correlating factors.
Ethnic origin would be what is known as a RATING factor rather than a RISK factor - i.e. it indicates the level of the true cause rather than being the cause itself. (Another example would be if red cars had more accidents than other colours. The cause would be that riskier people buy red cars, not that the colour red causes cars to crash).
Nothing wrong with rating factors. But using ethnic origin as a rating factor would be extremely political, to say the least. Very unwise, when you can just ask for the address and occupation of a person and save yourself the hassle. In fact despite the some lack of objectivity (people move house and they move jobs; job descriptions vary), these questions are asked on application forms usually and taken into account. But sex and age are still THE important factors.
I agree that genetics presumably have nothing to do with it (genetically, “white” and “black” are nonsensical concepts). In addition to the factors you mentioned, I would assume poverty leads to poorer health care, which leads to lower life expectancy, and poverty is often correlated with race.
Indeed Danimal - but “level of poverty?” would be a very difficult question to answer on an insurance application form! Occupation and address are pretty good indicators of poverty level, so are much more likely to be used to rate the risk.
We pick our rating factors to be [ul][li]objective[/li][li]A good indicator of the risk[/li][li]independent, as far as is possible[/ul]Age, sex, address, occupation, smoking status are all rating factors that meet the above criteria to a greater or lesser extent. Ethnic origin would not be a good indicator of risk. Poverty would not be objective.[/li]
pan