Towards A Universal Framework For Insurance Anti-Discrimination Laws

Discrimination in insurance is principally regulated at the state level. Surprisingly, there is a great deal of variation across coverage lines and policyholder characteristics in how and the extent to which risk classification by insurers is limited. Some statutes expressly permit insurers to consider certain characteristics, while other characteristics are forbidden or limited in various ways. What explains this variation across coverage lines and policyholder characteristics? Drawing on a unique, hand-collected data-set consisting of the laws regulating insurer risk classification in fifty-one U.S. jurisdictions, this Article argues that much of the variation in state-level regulation of risk classification can in fact be explained by focusing exclusively on three factors: (i) the predictive capacity of the characteristic in question; (ii) the extent of the adverse selection problem created if the characteristic is restricted; and (iii) the extent to which discrimination on the basis of the characteristic is considered illicit. The Article concludes by suggesting that this implicit conceptual framework, which is embedded in the pattern of general and specific insurance anti-discrimination laws that have been enacted by states across the country, sheds new light on the nearly-universal state prohibition against unfair discrimination by insurers