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Colorado bill prohibits insurer from using ‘discriminatory’ data to set rates – Colorado Springs, Colorado

Colorado Springs, Colorado 2021-05-04 08:53:31 –

By Patty Nieberg, Associated Press in the United States

Colorado legislators are considering legislation that bans insurers from using consumer information collected from external sources such as social media and court and homeownership records to determine premium rates.

The bill prohibits insurers from using third-party site data to claim higher premiums based on race, nationality or ethnicity, religion, gender, sexual orientation, or disability. Such data also includes consumer credit scores, purchasing habits, and education levels.

The bill also applies to the identification data of algorithms and predictive modeling, which are the systems insurers use to assess risk-based characteristics that affect customer proposal rates.

It passed the Senate’s Business, Labor and Technical Committee on Monday.

According to the text of the bill, the use of external consumer data “has a significant negative impact not only on the availability and affordability of insurance for protected classes of consumers, but also on the use of such insurance. There is a possibility”.

“The algorithms are not objective in nature. They reflect not only the data used, but also the people who designed them,” said Democratic Senator Janet Buckner, who sponsors the bill.

The datasets used to train machines can contain biases and errors, and as a result, machines can “persist past patterns and leave room for social change,” she said. Added.

Through hearings, several Republican committee members expressed concern about a bill requiring individuals to disclose more demographic data than insurers currently require. But the bill sponsor said he wouldn’t do that.

“This bill doesn’t hurt you. It’s a peek inside the algorithms and data used, so if the data is used properly, it’s okay,” Buckner said. Says.

Beginning January 1, 2022, insurers using external data sources will be required to submit disclosures to the insurance department to investigate and investigate the external data sources. The insurance commissioner may limit or prohibit the use of external data if it determines that it is unfairly distinguished.

Witnesses who testified in support of the bill said data-driven insurance practices could contribute to the cyclical economic disparity of people of color.

Bethany Play, director of legal affairs at the Colorado Center on Law and Policy, testified in support of the bill. She compared this issue with redlining, a practice of the 1930s by banks that refused to lend to certain minority districts. This made it impossible for residents to build wealth through home ownership.

“Insurance practices that are overcharged compared to risk can make it difficult for Coloradans of color to obtain coverage or satisfy claims,” ​​she said. They can also affect the ability of families to “save and prosper for the future” by sending their children to college.

Charles Bell, Program Director of Consumer Reports, a consumer-oriented survey, says credit scores, education levels, and job titles can affect consumer car insurance premiums, according to a nonprofit survey. ..

“We found that a supermarket cashier with a high school degree could pay as much as $ 455 more than someone who is a vice president of a supermarket with an executive degree,” Bell said.

In a 2015 report, Bell found that researchers collected online price quotes for all US postal codes and found consumers with good driving records, but low-credit consumers had good credit. He said he could pay $ 1,000 more in annual premiums than his consumers. “They will pay about $ 1,141 more than a convicted drunk driver,” he said.

People who testified against the bill, such as Roosevelt Mosley, principal and consulting actuary at Pinnacle Actuarial Resources, further studied the “range of problems” of discriminatory data practices before enacting legislation regulating insurers. Said you need to.

Mosley reiterated concerns raised by other opposition witnesses that the bill could harm consumers rather than help them.

Eliminating or limiting the use of risk-related properties by insurers could have “unintended consequences,” market volatility and higher premiums, Mosley said.

Kelly Campbell, vice chairman of the General Insurance Association of America, who testified against it, said it was already against the law for insurers to discriminate unfairly.

“If (Colorado’s Department of Insurance) doesn’t have the tools to investigate insurer practices to protect consumers from related harm, it’s a completely different argument than what’s presented,” Campbell said. Says.

State insurance commissioner Michael Conway said the department does not have sufficient resources to audit the insurer’s algorithms. According to Conway, the bill requires more accountability by having insurers perform “stress tests” on their data systems and report them to agents.

The bill passed the committee in a 4 to 3 party line vote in favor of the Democratic Party. Next, head to the debate on the Senate floor. It is expected to pass through a Democratic-controlled parliament.

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Nieberg is a corps member of the Associated Press / Report for America Statehouse News Initiative. Report for America is a non-profit national service program that places journalists in the local newsroom to report on unreported issues.

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Colorado bill prohibits insurer from using ‘discriminatory’ data to set rates Source link Colorado bill prohibits insurer from using ‘discriminatory’ data to set rates

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