What does unfair discrimination in insurance imply?

Unfair discrimination in insurance refers to the practice of assigning different premium rates within the same actuarial class without a valid basis. This means that individuals who have similar risks and characteristics may be charged different premiums, which is unjust and not supported by actuarial data.

When insurance companies evaluate risks, they often group policyholders into actuarial classes based on shared characteristics such as age, health status, or type of coverage. All members of that specific class should be treated similarly in terms of pricing and terms of coverage because they represent a similar risk profile. Deviating from this standard without reasonable justification constitutes unfair discrimination.

Assigning different rates within the same class can lead to a form of discrimination where personal biases or inappropriate factors might influence premium pricing, which is against ethical and regulatory standards set forth by insurance laws. In contrast, fair pricing practices would rely on objective data and established risk factors to determine rates uniformly for all eligible individuals within the same class.