Research Paper Series on Race and Insurance Pricing

Scales of Justice colorful
The CAS Research Paper Series on Race & Insurance Pricing was created by the Casualty Actuarial Society to help guide the insurance industry toward proactive, quantitative solutions to address potential racial bias in insurance pricing. The reports explore different aspects of unintentional potential bias in insurance pricing and address both historical foundations as well as forward-looking solutions for quantifying and addressing potential bias. With these reports, the CAS aims to inspire and generate discussions about potential bias across all areas of insurance pricing and other insurance operations, and to encourage actuaries to proactively participate in conversations with other stakeholders on this topic.

Phase II – Released in 2024

Navigating Fairness - 2024 Race in Reinsurance Series
Now Available! A Practical Guide to Navigating Fairness in Insurance
By Jessica Leong, FCAS; Richard Moncher, FCAS; and Kate Jordan

This paper aims to create a framework to help insurers develop models that are more likely to comply with evolving regulations on unfair discrimination and bias.
Regulatory Perspectives
Now Available! Regulatory Perspectives on Algorithmic Bias and Unfair Discrimination
By Lauren Cavanaugh, FCAS, MAAA; Scott Merkord, FCAS, MAAA; Taylor Davis, FCAS, MAAA; and David Heppen, FCAS, MAAA

This paper aims to explore regulatory perspectives on algorithmic bias, including U.S. state regulator concerns with current insurance pricing practices, perceptions of fairness testing approaches and plans for future activities.
Balancing Risk Assessment
Now Available! Balancing Risk Assessment and Social Fairness: An Auto Telematics Case Study
By Jean-Philippe Boucher, Ph.D. and Mathieu Pigeon, Ph.D.

This paper evaluates the potential for telematics or usage-based insurance rating variables to reduce insurers reliance on protected information, (e.g. sex, age), or sensitive information, (e.g. marital status, territory, credit).
Comparison of Regulatory Framework AI usage in Insurance
Now Available! Comparison of Regulatory Framework for Non-Discriminatory AI Usage in Insurance.
By: David Schraub, FSA, CERA, MAAA, AQ; Jing Lang, FSA, FCIA, MAAA, FLMI; Zhibin Zhang, FSA, FCIA; and Mark A. Sayre, FSA, CERA, JD, CIPP/US|E

This joint report from the CAS and Society of Actuaries offers a comprehensive overview of the latest and emerging regulatory activities in China, the U.S., Canada, and Europe, focusing on the prevention of discriminatory practices in the use of artificial intelligence (AI) within the insurance industry. It has a particular relevance to our international audiences.

Please note: we recommend CAS members and the broader actuarial community read this joint paper in anticipation of the full release of Phase 2 of the CAS Research Paper Series on Race and Insurance Pricing.
Pratical Applications of Bias Measurement - 2024 Race and Reinsurance series
Coming Soon! Practical Application of Bias Measurement and Mitigation Techniques in Insurance Rating
By CAS Race and Insurance Pricing Task Force

This paper aims to expand upon the 2022 “Methods for Quantifying…” paper by illustrating the application of analytical techniques for bias measurement and mitigation in the insurance pricing context. This includes discussions of several options for each step of the analysis, as well as the benefits and limitations of each.
Bias Mitigation - 2024 Race and Reinsurance Series
Coming Soon! Potential Unintended Impacts of Bias Mitigation on Other Protected Class Dimensions
By Pinnacle Actuarial Resources

This paper explores the possible outcomes of common regulatory solutions aimed at reducing impacts of bias on one protected class dimension, such as ethnicity, as it relates to other protected class dimensions, such as age or gender.

Phase I – Released in 2022

Methods for Quantifying Discriminatory Effects on Protected Classes in Insurance
Methods for Quantifying Discriminating Effects

By Roosevelt Mosley, FCAS, CSPA and Radost Wenman, FCAS

As the insurance industry focuses attention on potential racial bias across all practice areas, this paper examines three approaches to defining and measuring fairness in predictive models. It also provides an overview of several bias mitigation techniques that can be performed during the input, modeling, or output phase of a model once a set of fairness criteria has been adopted.

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Approaches to Address Racial Bias in Financial Services: Lessons for the Insurance Industry
Approaches to Address Racial Bias in Financial Services Lessons for the Insurance Industry

By Members of the 2021 CAS Race and Insurance Research Task Force

This paper examines issues of racial bias in lending practice for mortgages, personal and commercial lending, as well as credit-scoring. It looks at these four areas and describes solutions intended to address any potential bias, which may include government intervention, internal bias testing and monitoring measures, and development of new products to mitigate bias.

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Defining Discrimination in Insurance
Defining Discrimination in Insurance

By Kudakwashe F. Chibanda, FCAS

This paper defines several terms that are currently being used in discussions around potential discrimination in insurance – protected class, unfair discrimination, proxy discrimination, disparate impact, disparate treatment, and disproportionate impact – and provides historical and practical context for them. It also illustrates the inconsistencies in how different stakeholders define these terms.

Please see errata for revisions made on September 23, 2022.

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Understanding Potential Influences of Racial Bias on P&C Insurance: Four Rating Factors Explored
Understanding Potential Influences of Racial Bias on PC Insurance Four Rating Factors Explored

By Members of the 2021 CAS Race and Insurance Research Task Force

This paper examines four commonly used rating factors in personal lines insurance – credit-based insurance score, geographic location, home ownership, and motor vehicle record – to understand how the data underlying insurance pricing models may be impacted by racially biased policies and practices outside of the system of insurance.

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Do you have feedback on the Race and Insurance Pricing Research Series or an idea for additional topics for research on this issue? The CAS research committees are interested in your input to potential research projects. Submit your idea or feedback in the box below and it will be forwarded to the appropriate CAS research committee. Please include your name and e-mail address so that you can be contacted for further discussion about your idea, if the need arises.

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